Module 1 Flashcards
What does “regulation” refer to in the context of government involvement?
Regulation refers to the government’s oversight and control of a particular sector of society to ensure compliance with rules and standards.
What are the aims when developing regulation?
The aims when developing regulation include:
Market confidence
Financial stability
Consumer protection
Reduction of financial crime
What are examples of events or agencies that may influence the development of regulation?
Examples include the Global Financial Crisis (GFC), collapse of finance companies, IMF FSAP Report, FATF recommendations, and local events such as aging population and low savings rates.
What is the purpose of a regulatory framework?
A regulatory framework describes a set of rules that apply to an industry, how those rules interact, and their application to individuals and businesses within that industry.
What are the two key parts of a regulatory framework?
The two key parts of a regulatory framework are Acts (passed by Parliament) and Legislative Instruments (such as Regulations, Codes, and Notices).
What are the consequences of non-compliance with legislative requirements for financial service providers?
Consequences may include direction from regulators to comply, fines, suspension of licenses, deregistration, and reputational loss.
Differentiate between Acts, Regulations, Codes, and Notices.
Acts are passed by Parliament and contain legal principles; Regulations deal with technical details or frequent changes; Codes establish professional behavior standards; Notices provide exemptions from specific regulatory provisions.
Can Jake, an employee in the marketing department of Aotearoa Bank, be held liable for penalties arising from consumer legislation breaches in promotional material?
No, Jake’s employer holds direct and vicarious responsibility for his actions as an employee.
What does the Financial Service Providers (Registration and Disputes Resolution) Act 2008 establish?
The Act establishes a registration system for all financial service providers and requires them to join an approved dispute resolution scheme.
What types of financial service providers are required to register under the Financial Service Providers (Registration and Disputes Resolution) Act 2008?
Entities and individuals providing financial services such as financial advice services, banks, non-bank deposit takers, lenders, fund managers, insurers, and issuers of securities must register.
What information must financial service providers provide to the Registrar in an application for registration?
Financial service providers must provide details such as their trading name, addresses (registered office, business address, address for communication, email address), and pass a criminal conviction background check.
What is the purpose of the Financial Service Providers Register (FSPR)?
The purpose of the FSPR is to provide an electronic register of financial service providers, increase transparency of public information related to financial service providers, prevent certain individuals with specific criminal convictions from involvement in management, and help New Zealand comply with international obligations to prevent money laundering and terrorism financing.
What information is included on the FSPR about a financial service provider like David, a financial adviser?
Information about David on the FSPR includes his name, business address, approved dispute resolution scheme details, type of financial service he provides, statement of engagement by Aotearoa Home Loan Services, and any warnings by the registrar.
What are the requirements for financial service providers regarding annual confirmation?
Financial service providers must annually confirm details like trading name, addresses, and contact information to the Registrar.
What are the consequences of non-compliance with registration requirements under the Financial Service Providers Act?
Penalties for non-compliance include imprisonment or fines for individuals, and fines for financial institutions. The registrar can deregister an FSP for various reasons such as failure to join a dispute resolution scheme or providing false information.
