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Financial Markets Conduct Act 2013

Governance of financial products - Intervention in debt securities offered under regulated offer or registered schemes - Provisions assisting supervisor or FMA to intervene

205: FMA's powers of direction

You could also call this:

"The FMA can give orders to protect investors if their money is at risk."

Illustration for Financial Markets Conduct Act 2013

The FMA can tell someone what to do if they think people who have invested in something might lose money. You might be at risk if you have invested in a debt security or a registered scheme. The FMA will only do this if the person who is supposed to be in charge is not doing their job or if something needs to be done quickly.

The FMA can give a direction to the person in charge, which is like a formal instruction. They have to do this in writing and in a specific way. If there is no one in charge, the FMA can give the direction to the company that issued the investment.

The FMA has to follow certain rules when giving directions, and you can find more information about this in the Financial Markets Conduct Act 2013 or by looking at similar laws, such as s 49(1), (2).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091224.

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204: Duty of supervisor to report serious financial problems to FMA, or

"Supervisors must tell the FMA about serious money problems with the companies they oversee."

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206: FMA's directions to supervisor (or issuer), or

"The Financial Markets Authority gives orders to supervisors or companies to follow certain rules."

Part 4Governance of financial products
Intervention in debt securities offered under regulated offer or registered schemes: Provisions assisting supervisor or FMA to intervene

205FMA's powers of direction

  1. The FMA may exercise a power under subsection (2) if it is satisfied that—

  2. there is a significant risk that the interests of holders of a debt security or scheme participants in a registered scheme will be materially prejudiced; and
    1. 1 of the following applies:
      1. the supervisor of the debt security or registered scheme is aware of that risk and has had a reasonable opportunity to take action to eliminate or reduce the risk but has not done so; or
        1. action is urgently required to eliminate or reduce the risk and it is not reasonably practicable to wait for the supervisor to do so; or
          1. there is no supervisor.

          2. The FMA may, by written notice to the supervisor and otherwise in the prescribed manner, give a direction to the supervisor.

          3. If there is no supervisor, the FMA may, by written notice to the issuer and otherwise in the prescribed manner, give a direction to the issuer.

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