From 1 December 2016 all offers of financial products to retail investors must be made under the Financial Markets Conduct Act 2013.
Commerce and Consumer Affairs Minister Paul Goldsmith says this date marks the end of the two-year period for the financial markets to transition to the Act.
“A challenge for many would-be investors has been making sense of a prospectus laden with financial jargon and legalese. From today, that same financial information must be stated in plain English in the new product disclosure statements,” Mr Goldsmith says.
The Act also introduces new requirements to strengthen the governance of financial products, such as requiring managed investment schemes to have a licensed manager and an external supervisor.
“During the transition period, 190 financial services firms have become licensed. Investors can be assured this means the FMA has reviewed the providers’ governance, conduct, systems and controls, and whether they have the necessary capability to deliver the service," he says.
The Financial Markets Authority (FMA) says the 190 licensed financial services firms range from some of New Zealand's largest corporates, to SMEs in the fintech sector like equity crowdfunding platforms and peer-to-peer lenders, and also sole trading businesses such as independent trustees.
"This is in addition to the 1,800 authorised financial advisors who were already licensed by the FMA under the Financial Advisers Act 2008," it says.
FMA Chief Executive Rob Everett says the heavy lifting has now been completed to put the infrastructure for the new regime in place.
"The licensing framework laid out in the FMC Act sets us up for the next phase of transformation in financial services – embedding high standards of conduct in financial service providers that place investors’ interests at the heart of their business models," he says.