Financial Markets Conduct Act 2013

Disclosure of offers of financial products - Procedure for making regulated offers - Money for financial products must be held in trust

87: Money for financial products must be held in trust

You could also call this:

"Your money is safe when you buy financial products because sellers must look after it until you get what you paid for."

When you pay money to buy financial products, the person selling them must hold your money in trust. This means they must look after your money until they give you the financial products or use the money for the purpose you paid it for. They must follow the rules about how to deal with your money while it is being held in trust.

The seller must hold your money in trust until they give you the financial products, use the money for what you paid it for, give the money back to you, or use it as you instructed them to after you applied for the financial products. If the seller needs to give your money back, they must do it as soon as possible and no later than one month after they are supposed to repay you.

The seller must deal with your money in a specific way while it is being held in trust, including following any rules about investing the money. If you want to know more about what happens to your money when you buy certain types of financial products, you can look at section 11(2)(c) for more information about further contributions or investments. There are also rules about derivatives, which you can find in section 448.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091040.


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"Directors are not in trouble if they did nothing wrong and didn't neglect their job."


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88: Offering financial products of entity that does not exist, or

"No selling products from a non-existent company if it would be regulated if it existed"

Part 3Disclosure of offers of financial products
Procedure for making regulated offers: Money for financial products must be held in trust

87Money for financial products must be held in trust

  1. This section applies to money paid to an issuer or offeror of regulated products if the money is paid by a person (A)—

  2. to acquire the financial products or an increased interest in the financial products; or
    1. as a further contribution or investment or a further deposit as referred to in section 11(2)(c).
      1. The issuer or offeror must hold the money in trust for A until—

      2. the financial products are issued or transferred; or
        1. the money is otherwise applied for the purpose for which it was paid (for example, to increase the extent of A's interest in a scheme or A's deposit or to pay a fee); or
          1. the money is repaid to A; or
            1. the money is applied in accordance with A's express instructions given after the application for financial products was made and the money was paid.
              1. The issuer or offeror must—

              2. deal with the money, while it is held in trust, in the prescribed manner (including ensuring that any prescribed requirements relating to the investment of the money are complied with); and
                1. if the money needs to be repaid, ensure the money is repaid as soon as practicable and, in any event, no later than 1 month after the obligation to repay arises.
                  1. This section does not apply to derivatives (but see section 448, which provides for regulations relating to the holding and application of investor funds and property by derivatives issuers).