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Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Regulating conduct of financial institutions - Miscellaneous provisions

446Q: Meaning of intermediary

You could also call this:

"What it means to be an intermediary: helping people get financial services or products and getting paid for it"

Illustration for Financial Markets Conduct Act 2013

You are an intermediary if you help provide a financial service or product to someone and get paid for it. This payment can come from the company providing the service, another company, or another intermediary. You get paid because you are involved in helping the person get the service or product.

You are involved if you help someone get a contract for a service or product, or if you give them advice about it. If you just give people information or advertise something, you are not involved.

If you are an employee of a financial company or an intermediary, you are not considered an intermediary just because of your job. The Financial Markets (Conduct of Institutions) Amendment Act 2022 has more information about this.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1428515.

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Part 6Licensing and other regulation of market services
Regulating conduct of financial institutions: Miscellaneous provisions

446QMeaning of intermediary

  1. In this Act, a person is an intermediary if—

  2. the person is involved in the provision of a relevant service or an associated product to a consumer (see subsections (3) and (4)); and
    1. the person is paid or provided with a commission or other consideration in connection with that involvement; and
      1. the commission or consideration is paid or provided, directly or indirectly, by or on behalf of any of the following:
        1. the financial institution that provides the service or product:
          1. if the person referred to in paragraphs (a) and (b) is itself a financial institution, any other financial institution or person that provides the service or product:
            1. another person who is an intermediary in relation to the service or products.

              2. Examples

              A bank enters into a master agreement with a company (A). The agreement provides for A to arrange home loans for the bank. It provides for a commission to be paid to A for arranging the home loans and for the processes to be followed by A.

              A is an intermediary.

              Independently of the bank, A arranges with mortgage brokers, including a person (B), for home loans to be arranged through A’s master agreement. The mortgage brokers and A agree on the commission, and the support services, that A will give to the mortgage brokers for arranging the loans.

              B arranges a loan for a consumer and submits the application through A’s processes and the master agreement. The bank pays A a commission for the loan. A deducts a portion of the commission for A’s involvement in arranging the loan and pays the balance of the commission to B.

              B is also an intermediary.

              A broker arranges contracts of insurance for policyholders. The broker is paid only by the policyholders (and has no arrangement with insurers that directly or indirectly provides for the payments). The broker is not an intermediary.

            2. However, a person is not an intermediary if the person is involved only as—

            3. an employee of a financial institution; or
              1. an employee of an intermediary.

                1. In this subpart, a person is involved in the provision of a relevant service or an associated product to a consumer if the person does either or both of the following:

                2. arranges a contract for the service or for the acquisition of the product:
                  1. gives regulated financial advice in relation to the product.

                      1. Example

                      A person (W) maintains an Internet site that gives consumers information about 1 or more insurance contracts. Consumers are able to take steps towards entering into those contracts using the Internet site. W receives a fee from the insurer when a consumer enters into a contract using the Internet site.

                      W is involved because W procured the contract. W is an intermediary.

                    1. However, a person is not involved in the provision of a relevant service or an associated product to a consumer merely because the person carries out 1 or more of the following activities:

                    2. distributing an advertisement or other promotional material:
                      1. carrying on a prescribed occupation and acting in relation to the service or product in the ordinary course of carrying on that occupation:
                        1. carrying out a prescribed activity.

                          Notes
                          • Section 446Q: inserted, on , by section 12 of the Financial Markets (Conduct of Institutions) Amendment Act 2022 (2022 No 36).