FMA cracks down on financial register misuse

Liam Mason, director of regulation at the Financial Markets Authority, says it will target directors who encourage the misuse of its financial service providers register. Photo/Supplied.

The Financial Markets Authority says it will crack down on New Zealand directors who encourage misuse of its Financial Service Providers Register.

The register was set up in 2008 and from 2010 any company or individual providing financial services in New Zealand had to be on it.

But it has caused problems for the regulator with foreign companies and individuals using it to register in New Zealand and appear more legitimate when targeting overseas investors.

In 2014 the FMA was given the power to prevent registration and remove companies or individuals from the register.

A report released today shows that since then it has reviewed 115 registrations and forced 69 to deregister. A further 21 have voluntarily deregistered.

Of 93 applications for registration referred to the FMA, just 19 were approved.

Three financial service providers have taken legal action against the FMA over their removal.

Now the regulator says it will target Kiwi directors who may be helping companies misuse the register.

Registered companies must have a New Zealand director but the regulator is worried some directors may not be providing a legitimate service.

Liam Mason, director of regulation at the FMA said: "In our experience, some local directors of businesses on the FSPR provide at most an administrative service with little or no real governance role in the company."

The FMA's report sets out its expectations for those directors and scenarios where it would take action against them.

Mason said it would use its full range of enforcement tools against any directors who registered under false pretences or were in breach of the regulations.

It has also published online information for consumers in Chinese, Malay and Arabic reflecting the main regions or areas where the FMA has received the largest number of complaints.

Since 2014 it has received 1080 complaints against 296 businesses or individuals on the register.