Securities Trustees and Statutory Supervisors Licensing Guidance Note
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Submission Excerpt
TCA's General Comments
Under the Securities Trustees and Statutory Supervisors Act 2011 ("the Act") the focus of the licensing process is on the entity that will be acting as trustee or statutory supervisor. It is the entity that applies for and is granted the licence and the entity that loses the licence in the event that FMA decides to cancel it. The bulk of the criteria in the Act focus the assessment on the entity rather than the individuals behind it: only one mandatory criterion (being section 16(2)(b)) and one discretionary criterion (being section 16(3)(a)) specifically refer to individuals.
In light of this statutory backdrop, the proposed Guidance Note appears to focus too much of its attention on the individuals who are involved with the entity, in preference to the entity itself. TCA would suggest refocusing the proposed Guidance Note on the entity, rather than the individuals who happen to be involved in the entity at the time the licence application is made.
TCA notes that the Act provides for licences to be granted for a period of up to eight years. TCA was concerned that earlier versions of the proposed Guidance Note referred to the default period that FMA would grant a licence as being five years. This has now changed so that the proposed Guidance Note refers to licences being granted for a period of up to eight years, with the actual duration being determined on a case by case basis.
TCA submits that the default duration of a licence should be eight years unless there are special and very good reasons for a shorter period. As noted in previous discussions, Trustee appointments are long term by their nature and significant expenditure and resources are required to go through the licensing process. Furthermore, if a licensee's performance is inadequate, FMA has the power to cancel its licence. Given this power, there appears to be no reason to grant licences for less than the statutory maximum period.
The proposed Guidance Note requires disclosure of commercially sensitive information to FMA. It is important that commercially sensitive information is only required to be disclosed as part of the licensing process where such disclosure is relevant and necessary. Furthermore, because FMA is subject to the Official Information Act 1982, any commercially sensitive information that does end up being disclosed to FMA as part of the licensing process must be protected from disclosure by FMA under that statute. Disclosure could prejudice the commercial position of applicants, undermine the competitive market for Trustee services and thereby increase costs for investors. TCA would therefore like know what robust processes FMA proposes to ensure that commercially sensitive information disclosed to it as part of the licensing process is kept confidential.