Confidentiality obligations – when regulators need to keep things private

The High Court has released the eagerly awaited decision of ANZ Bank New Zealand Limited v Financial Markets Authority.[1]  The decision provides useful guidance on the extent to which the regulator is entitled to disclose confidential information obtained under the Financial Markets Authority Act 2011 (Act) to third parties.


The Financial Markets Authority (FMA) issued six notices under section 25 of the Act against ANZ Bank New Zealand Limited (ANZ) compelling the disclosure of documents and information in connection with its investigation into Company X’s liquidation (whose identity remains unknown due to court restrictions).

ANZ complied with the notices.

The FMA then proposed to disclose some of the documents that had been provided by ANZ to investors of Company X.  The FMA said that the reasons for the disclosure was to:

  • obtain responses and any additional information from investors;
  • determine the next steps that should occur to enable investors to evaluate the merits of a claim against ANZ; and
  • enable the FMA to determine whether to exercise its powers to take representative action on behalf of the investors under section 34 of the Act.

ANZ challenged this decision. The court was asked to determine whether the FMA had a proper purpose or basis upon which to make the disclosure to third parties.  Ultimately, for reasons set out below, Justice Fitzgerald found that the FMA did not.

Is the FMA permitted to disclose documents obtained through the exercise of its statutory powers to third parties?

Section 59 of the Act prohibits the FMA from disclosing any information or documents obtained pursuant to a section 25 notice other than in the prescribed circumstances recorded in the Act.  The FMA relied on those provisions in the Act which permit disclosure if it:

  • is for the purpose of, or connected with, the performance or exercise of any function, power or duty exercised by the FMA (section 59(3)(c)); or
  • is to a person whom the FMA is satisfied has a “proper interest” in receiving the information or document (section 59(3)(f)).

These provisions are broad.  As the Court noted, on their face, disclosure in any way related to any of the FMA’s powers or functions, no matter how tenuous the connection might be, would be permitted.

However, the Court stressed the importance of confidentiality in the overall scheme of the Act and determined that disclosure is permitted:

  • when it is “reasonably necessary” for the purposes of the performance or exercise of any function, power or duty conferred or imposed on the FMA by the Act or any other enactment;
  • where there is a “close connection or nexus” between the disclosure and the performance or exercise of the FMA’s relevant function, power or duty.

Justice Fitzgerald found that the FMA failed to establish that the proposed disclosure to the investors is reasonably necessary or closely connected to its function to bring proceedings on their behalf under section 34 of the Act.  In particular, Fitzgerald J did not regard it as implicit in section 34 of the Act that the FMA must consult with a person when having regard to the likelihood of that person commencing proceedings – there is a difference between an assessment of the likelihood of a person bringing proceedings and knowing that the person will (or will not) bring proceedings.  Even if the FMA chose to engage with the person as part of its assessment, disclosure of confidential information to that person would be “a significant additional step”.  In effect, disclosure would influence the likelihood of the person commencing proceedings and place it in a privileged position compared to other litigants making the same sort of decisions.

The court also rejected the FMA’s other argument that disclosure is permitted because disclosure would be to a person with a “proper interest”.  Justice Fitzgerald did not consider that disclosure to a person who has a purely private interest in receipt of the materials, divorced from any of the public purposes in the Act, or the public functions or objectives of the FMA, would be disclosure to a person with a “proper interest”.

Our view

Although this decision curbs the extent to which the FMA is likely to propose disclosing confidential material compulsorily acquired, it does not rule out any potential disclosure.     For example, although not considered in any detail, Justice Fitzgerald alluded to a situation where the FMA might be entitled to disclose documents under section 59(3)(c) if an operative purpose for the disclosure was to obtain responses and any additional information from the proposed recipient (i.e. the investors of Company X in this case).

In any event, the decision will cause the FMA to carefully consider when disclosure is really permitted.  Ultimately, the FMA is not entitled to invite investors to make claims against companies based on information that the investors would otherwise not have had access to had the FMA not intervened.


[1] [2018] NZHC 691.

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