On 25 March 2021, the Financial Markets Authority (FMA) released a response to submissions on its March 2018 consultation on proposed regulatory returns for licensed derivative issuers, providers of discretionary investment management services (DIMS) and managers of managed investment schemes (MIS) (together, licensees) under the Financial Market Conduct Act 2013 (FMCA).
That consultation, which concluded in April 2018, sought submissions on the appropriateness, feasibility, cost and implications of providing the information collected through these returns, as well as their reporting periods.
Who needs to read it? Why?
This will be of particular interest to the various licensees described above, as it relates to their ongoing regulatory reporting obligations. It may also be relevant to other interested parties, such as industry advisers and potential applicants to be licensees.
What does it cover?
At present, licensed derivatives issuers, DIMS providers and MIS managers are not required to submit regulatory returns, despite a condition covering regulatory returns being included in licence standard conditions.
In their response to the submissions, the FMA took the position that the regulatory return obligations in the licence conditions should be activated. In line with the statutory purposes of the FMCA, such a move is expected to:
- improve market conduct and ensure access to quality financial advice and market services;
- impose only reasonable and necessary compliance costs on licensees;
- promote transparency around licensees’ ongoing capability to provide their services and the development of fair, efficient and transparent financial markets; and
- promote well-regulated financial markets and the confident and informed participation of businesses, investors and consumers in them.
Following submissions, however, the FMA has amended or removed some of the original proposed reporting requirements, and added clarification where it was thought to be needed.
The final proposed question set for each category of licensee can be found in the appendix to the response to the submissions. These include some guidance as to what is being sought by particular questions.
As set out below, the first returns will need to include data for the period from 1 July 2021. In some cases (e.g. complaints data) licensees will be able to use parts of their existing internal reporting frameworks. For other items, licensees may not currently collect the relevant information or may need to modify the precise information collected.
Licensees should therefore, as a priority, review the final form of regulatory return requirements and consider whether any changes are needed to their processes and systems to enable reporting as required.
Following these changes, licensees will be required to submit their first regulatory return (for the period of 1 July 2021 to 30 June 2022) by 30 September 2022. Subsequent returns will be required annually, based on the same dates.
If you have any questions in relation to these regulatory returns, licensee obligations or the FMCA regime more generally, please contact one of our experts.
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