New Zealand Capital Finance

UNDERSTANDING FSP REGISTRATION

WHO MUST REGISTER AS A FINANCIAL SERVICES PROVIDER
Entities and individuals who:
- live or have a place of business in New Zealand; and
- are in the business of providing financial services (in New Zealand or overseas)

must register to provide that particular financial service on the FSPR.

Those entities and individuals will have to register as a financial service provider (FSP) by 1 December 2010, or 31 March 2011 for financial advisers.

The meaning of ‘financial service’ is defined in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. There are some exceptions set out in section 7 of the Act, such as lawyers and accountants who provide financial services as an incidental part of their business.

Common examples of financial service providers required to register are:

- Building Societies
- Credit Providers
- Credit Unions
- Financial Advisers (including financial planners)
- Finance Companies
- Foreign Currency Exchange Dealers
- Fund Managers
- Insurers
- Investment Portfolio Managers
- Issuers
- Money Changers
- Registered Banks
- Some professional trustees (such as trustees of debt securities or superannuation scheme trustees).

Individuals or companies unsure as to whether or not they will be required to register should seek their own independent legal advice.

WHO DOES NOT HAVE TO REGISTER?
Some individuals and entities who provide a financial service may not have to register:

- certain types of financial advisers
- lawyers, chartered accountants, tax agents, or real estate agents who provide a financial service as a necessary incident of their practice
- a non-profit organisation providing free financial services
- a trustee of a family trust providing financial services to beneficiaries

WHO CANNOT REGISTER?
There are some people who cannot register on the Financial Service Providers Register.

People who have been convicted of crimes involving dishonesty under the Crimes Act 1961, in the last five years, such as fraud, as well as anyone convicted of money laundering, or financing of terrorism offence, will be excluded from registering or from being involved in the management of a registered financial service provider

Undischarged bankrupts and banned directors will also not be able to register.

CONTROLLING OWNERS AND SENIOR MANAGERS

WHO IS A CONTROLLING OWNER?
A controlling owner of a financial service provider (FSP) is any person (including another company or entity) who beneficially owns 50% or more of the FSP.

For the purposes of the FSPR, the controlling owner is the person who enjoys the benefits of owning the majority interest in the FSP, not necessarily the person named in official documents – such as a company’s share register – as the legal owner. The beneficial owner is not always the registered owner (often otherwise known as the nominee owner).

The name of the controlling owner will not be made public on the FSPR. It is collected by the Registrar for the purposes of disqualification checks.

WHO IS A SENIOR MANAGER?
A senior manager of a financial service provider is a person who is not a director but occupies a position that allows the person to exercise significant influence over the management or administration of that provider (for example, a chief executive or a chief financial officer), and to be the link between the company and FSPR, engaged to provide regular and annual reports as legally required.

WHO MUST REGISTER AS A FINANCIAL SERVICES PROVIDER?
Entities and individuals who (a) live or have a place of business in New Zealand; and (b) are in the business of providing financial services (in New Zealand or overseas) must register to provide that particular financial service on the FSPR.

Those entities and individuals will have to register as a financial service provider (FSP) by 1 December 2010, or 31 March 2011 for financial advisers.

The meaning of ‘financial service’ is defined in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. There are some exceptions set out in section 7 of the Act, such as lawyers and accountants who provide financial services as an incidental part of their business.

Common examples of financial service providers required to register are:

- Building Societies
- Credit Providers
- Credit Unions
- Financial Advisers (including financial planners)
- Finance Companies
- Foreign Currency Exchange Dealers
- Fund Managers
- Insurers
- Investment Portfolio Managers
- Issuers
- Money Changers
- Registered Banks
- Some professional trustees (such as trustees of debt securities or superannuation scheme trustees).

Individuals or companies unsure as to whether or not they will be required to register should seek their own independent legal advice.

WHAT IS A FINANCIAL SERVICE?
Some examples of common financial services are:

- providing financial advice (including financial planning)
- mortgages, saving and cheque accounts, and loans – services your bank, building society or credit union may offer
- insurance – including life, health, home/contents, and vehicle
- money management and/or advice
- investment management and/or advice
- consumer loans and credit – such as a retailer selling an item on credit or providing a cash loan
- foreign currency exchanges – whether buying or selling
- money transfers.

WHAT HAPPENS IF I DON’T REGISTER?
Financial service providers must be registered to legally provide financial services. If they provide, or offer to provide, financial services without current registration, they are in breach of section 11 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

If a financial service provider provides, or offers to provide, financial services while in breach of the Act:

- individuals face up to 12 months imprisonment or a fine not exceeding NZ$100,000
- body corporates such as companies, building societies and credit unions face a fine not exceeding NZ$300,000.

MOVING FORWARD WITH YOUR REGISTRATION AS A FSP
To move forward with your registration as a FSP we need you to send us your company name and registration number only; that’s all we need on initial stage.

After our checking about shareholders and directors we shall be back to you, and depending on the structure of your company, we shall confirm which further information will be required;

For clients having incorporated through us, above information is not required, as we already have it in our files.

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