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New Zealand law explained for everyone

Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Regulation of client money or property services - Conduct obligations

431ZB: Provider must not receive client money if offer contravenes Act or regulations

You could also call this:

"Don't pay a provider if their product doesn't follow the law."

Illustration for Financial Markets Conduct Act 2013

If you are a provider of financial products, you must not take money or property from someone who wants to buy one of your products if the product does not follow the rules of the Financial Markets Conduct Act 2013 or its regulations. You should not take their money if you know, or should know, that your product is not allowed under the law. A product is considered a contravening product if it is being sold in a way that breaks the law, or if it was sold in a way that broke the law and this has not been fixed.

You can find more information about the law that applies to financial products by looking at the Financial Markets Conduct Act 2013 and its regulations. The rules about financial products are in place to protect people who buy them, and providers must follow these rules.

If a provider takes money for a product that does not follow the rules, they may be doing something wrong, and you should be careful when dealing with them.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS465981.

Topics:
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431ZA: Provider must exercise care, diligence, and skill, or

"Be careful and skilled when looking after someone's money or property"

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431ZC: Provider must pay client money into separate trust account and hold client property on trust, or

"Providers must keep clients' money and property safe in a separate trust account."

Part 6Licensing and other regulation of market services
Regulation of client money or property services: Conduct obligations

431ZBProvider must not receive client money if offer contravenes Act or regulations

  1. A provider must not receive client money or client property from a person for the acquisition of a financial product if—

  2. the product is a contravening product; and
    1. the provider knows, or ought reasonably to know, that the product is a contravening product.

      1. A financial product is a contravening product—

      2. if the product is being offered under a regulated offer and that offer contravenes this Act or the regulations; or
        1. if,—
          1. when the product was offered, the offer was a regulated offer and contravened this Act or the regulations; and
            1. the contravention has not been remedied.

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            Notes
            • Section 431ZB: inserted, on , by section 29 of the Financial Services Legislation Amendment Act 2019 (2019 No 8).