The regulator has for the first time ever filed charges against directors for FSPR abuse
The Financial Markets Authority (FMA) has filed criminal charges against a company and its New Zealand-based director for breaching the Financial Service Providers (FSP) Act.
The company is charged with two counts of breaching section 12 of the FSP Act.
The New Zealand-based director is charged with two counts of breaching sections 12 and 40 of the FSP Act.
Section 12 of the FSP Act provides that no person, including a business, can hold out that it provides financial services unless it’s registered on the FSPR and is a member of an approved dispute resolution scheme. Section 40 of the FSP Act covers a director’s liability if they knowingly authorise or knowingly fail to prevent a business committing an offence under the Act.
Each charge for breaching section 12 of the FSP Act carries a maximum fine of $300,000 for a company and a maximum penalty of either $100,000 fine and/or 1-year imprisonment for an individual. These charges are the first of their kind under Section 12 of the FSP Act.
The FMA alleges the company continued to hold out on two different websites it was registered on the Financial Service Providers Register (FSPR) after it had been deregistered, and despite subsequent warnings from Companies Office regarding misleading statements on its website as to FSPR registration.
FMA Head of Enforcement Karen Chang said: “The FMA will hold directors of companies to account where the company is in breach of the FSP Act and we’re concerned the FSPR is being abused. Our intention to target directors who encourage or facilitate abuse of the FSPR was set out in our report in September 2017, so a clear warning has been given.
“The FSPR has been abused by businesses and individuals who use New Zealand’s reputation as a well-regulated country to target overseas investors. The FMA invests significant time and resources in tackling this problem to protect the legitimacy of New Zealand’s financial services firms,” Chang added.
The charges have been filed in the Auckland’s North Shore District Court.
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