blog

Financial Markets Authority - Revised Draft Guidance Note: Effective Disclosure

Thu, 10 May 2012 10:21:17 +1200

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA supports the intent of the FMA's draft Guidance Note: Effective Disclosure (Guidance Note). TCA recognises that it is important for issuers to provide "high quality information" which is material and accurate and acknowledge that a "clear, concise and effective" standard will improve the quality of disclosure and help potential investors make better investment incomes.

US Foreign Account Tax Compliance Act (FATCA) - A Joint Submission

Mon, 30 Apr 2012 13:23:03 +1200

Click here to download this submission as a PDF

This is a joint submission made by Ernst & Young New Zealand to the NZ Inland Revenue Department on behalf of the leading financial services industry bodies in New Zealand, namely the Financial Services Council, Financial Services Federation, Workplace Savings NZ, the New Zealand Bankers' Association, and Trustee Corporations Association of New Zealand Inc.

The contents of the submission are intended for consideration by the US Department of Treasury and the US Internal Revenue Service.

Regulations Under the Non-bank Deposit Takers Bill 2011 - Consultation Document: Building Society Shares and Suitability Concerns

Fri, 27 Apr 2012 13:16:13 +1200

Click here to download this submission as a PDF

Financial Markets Conduct Bill

Thu, 26 Apr 2012 13:03:47 +1200

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA is fully supportive of the intent of the bill and welcomes this well overdue re-write of New Zealand's investment law. TCA applauds the aims of enhancing investor protection, encouraging honest, transparent and full disclosure and ensuring mum and dad investors can be confident in participating in New Zealand's capital markets.

Collectively, TCA members have over 650 years in the business of managing and safe-guarding assets. TCA therefore appreciates this opportunity to provide comments on the Bill and share the benefit of its members' knowlege and experience with the Commerce Committee. In light of TCA members' experience, TCA does have a number of suggestions to facilitate the effectiveness of the Bill's proposals and help avoid any potentially embarrassing unintended consequences.

TCA's comments and suggestions focus on areas of particular interest and concern to its members as a whole. Individual members may be making their own submissions on matters of specific interest or concern to them where appropriate.

TCA also wishes to note that much of the detail of the proposed regulatory regime is dependent on yet to be drafted regulations. In order to ensure maximum efficiency and effectiveness in the development and implementation of these regulations, TCA suggests that consultation needs to be started early.

Emissions Trading Scheme: Forestry

Mon, 23 Apr 2012 12:51:15 +1200

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA understands that consideration of 2011 Review (“the Review”) is at an advanced stage and that announcements can be expected shortly with amending legislation to be introduced by mid-year. However, TCA’s concern is with certain technical issues that were either not dealt with in the Review or have arisen through experience and a better understanding of the legislation.

Financial Markets Authority - Draft Guidance Note: Effective Disclosure

Fri, 09 Mar 2012 12:31:12 +1300

Click here to download this submission as a PDF

Review of the Law of Trusts - Stage 1: Fifth Issues Paper "Court Jurisdiction, Trading Trusts and Other Issues"

Thu, 01 Mar 2012 11:52:29 +1300

Click here to download this submission as a PDF

Income Tax - Whether income that is deemed to arise under tax law, but not trust law, can give rise to beneficiary income

Fri, 17 Feb 2012 11:46:02 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA believes the issue paper released is a step in the right direction and well overdue for the industry. Overall, TCA members are supportive of the paper INS0111 and believe that it is positive and gives Trustees some clarity and certainty going forward.

However, even though INS0111 does give TCA members some clarity and certainty, it does not address all the issues faced by Trustees. In particular, at the heart of this matter are the recent changes in the savings and investment regime and the move in the industry to PIE investments.

TCA members also find that the design of the IR 6 is not ideal for trusts and estates with PIE and FIF investments and request this matter is also addressed as part of this exercise.

Trustee Companies and Group Investment Funds under the Financial Markets Conduct Bill

Thu, 19 Jan 2012 11:42:03 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

1 TCA wishes to make two submissions to the Ministry of Economic Development in respect of the Financial Markets Conduct Bill (FMCB) and Group Investment Funds (GIFs). In summary, these submissions are:

1.1 The FMCB should specifically empower Trustee Companies to act as managers of Managed Investment Schemes (MIS).

1.2 The FMCB should amend the requirements for what Trustee Companies must disclose to 'qualifying beneficiaries' of GIFs so that Trustee Companies' obligations are treated as being discharged by the provision of a Product Disclosure Statement to 'qualifying beneficiaries'.

Licensing of Auditors and Registration of Audit Firms (Consultation Paper #1)

Fri, 16 Dec 2011 11:29:37 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA wishes to record its support of the concept licensing auditors and registration of audit firms. As with the Trustee licensing regime recently introduced, TCA considers it important that those charged with the responsibility of oversight of the reporting on debt securities, unit trusts, KiwiSaver schemes and retirement villages are appropriately qualified and licensed by FMA.

Revised option for proposed levy to fund the Financial Markets Authority

Fri, 02 Dec 2011 11:25:27 +1300

Click here to download this submission as a PDF

Proposed Variations to the Retirement Villages Code of Practice 2008: Consultation Document Part 2 (Department of Building and Housing)

Tue, 01 Nov 2011 11:21:31 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA is fully supportive of the intent of a review of the Retirement Villages Code of Practice 2008 (“the Code”) arising from the experiences of Statutory Supervisors and tragic outcomes of the recent Canterbury earthquakes.

In our members’ experience a number of questions have been raised as to fairness between village residents and operators. There were a number of occasions where the role of the Statutory Supervisor, to protect the interests of the residents, was not well supported by regulation (or the Code) and thus was not as effective as our members would have preferred.

Our comments in respect of the proposed variations to the Code focus on areas of particular interest and concern to TCA members as a whole. Individual members will be making their own submissions on matters specific to them where appropriate.

Also please note that our comments are predicated on the expectation that there is a Statutory Supervisor in a village. There are clearly implications where an exemption has been granted.

Proposed Variations to the Retirement Villages Code of Practice 2008: Consultation Document Part 1 (Retirement Commissioner)

Tue, 01 Nov 2011 11:14:14 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

Also please note that our comments are predicated on the expectation that there is a Statutory Supervisor in a village. There are clearly implications where an exemption has been granted.

Securities Trustees and Statutory Supervisors Licensing Guidance Note

Thu, 06 Oct 2011 13:29:42 +1300

Click here to download this submission as a PDF

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.

Non-bank Deposit Takers Bill

Thu, 06 Oct 2011 11:24:21 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA is supportive of the Bill. Its submissions relate mainly to fine tuning or technical matters.

Anti-Money Laundering and Countering Financing of Terrorism Act 2009: Exemption from the requirements of the Act for Statutory Supervisors of Retirement Villages

Thu, 06 Oct 2011 11:07:23 +1300

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA is supportive of the view that TCA-member statutory supervisors of registered retirement villages (“statutory supervisors”) should be exempt from the requirements of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“Act”). This exemption should be granted either as a class of reporting entity under section 157(1)(a) and/or as a class of transactions so far as they relate to statutory supervisors under section 157(1)(b) of the Act.

Implementation of Securities Trustees and Statutory Supervisors Act

Fri, 30 Sep 2011 10:39:33 +1300

The Trustee Corporations Association today welcomed the new Securities Trustees and Statutory Supervisors Act which comes into force tomorrow.

“This is an important step in the investor confidence value chain,” TCA Chairman, Clynton Hardy said.

“We approached the Government in early 2009 and volunteered to relinquish the then statutory right held by our members in favour of a new robust licensing regime, under the control of the regulator. The offer was accepted, and this new Act is the result.”

“The new licences will be tougher to get and tougher to retain, and that’s as it should be, he said.”

“Investors and regulators must have confidence that the highest levels of professional supervision are in place.”

“Another important feature of the change is that for the first time there is legislative provision for supervisors to report comprehensively to the regulator.”

“This is not only a major step toward improving investor confidence, but will mean that whole-of-industry statistics are publicly available for the first time.”

Mr Hardy said that the TCA was hoping to sign a Memorandum of Understanding with the Financial Markets Authority in the new year. This was expected to cover the FMA’s expectations of supervisors and communication, including market surveillance and early warnings.

“The TCA has a similar MOU with the Reserve Bank, signed in March 2010.

“We are expecting an open, professional relationship, though some distance, just as supervisors need distance from those under supervision,” he said.

Clynton Hardy

Chairman

Trustee Corporations Association of NZ Inc

30 September 2011

Financial Markets Conduct Bill - Exposure Draft

Tue, 06 Sep 2011 10:56:22 +1200

Click here to download this submission as a PDF

Click here to download additional submission as a PDF

Submission Excerpt

TCA’s General Comments

TCA is fully supportive of the intent of the review although there are a number of important areas of uncertainty highlighted below. We are concerned at the short time frame available for submissions and as a result TCA members haven’t been able to fully consider all aspects of the Bill and given the fundamental change in the securities legislation proposed. There are concerns that matters will be overlooked. Accordingly, we reserve our position so we can submit further at a later date on important matters if necessary.

Our comments in respect of the Exposure Draft focus on areas of particular interest and concern to TCA members as a whole. Individual members will be making their own submissions on matters specific to them where appropriate.

Our submission does not respond to the format suggested, (although most of the issues we have identified occur in Part 4). We have preferred to discuss the key topics of interest to Trustee Corporations by reference to the section numbers in the draft bill.

Review of the Law of Trusts - Stage 1: Fourth Issues Paper "The Duties, Office & Powers of a Trustee"

Wed, 31 Aug 2011 10:44:46 +1200

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

The Trustee Act 1956 is not fundamentally broken. There is no need for a wholesale change to the Act or to Trust Law.

However, the drafting of the Trustee Act 1956 is outdated and some provisions do not work well in the modern context. Accordingly, it would be desirable to redraft the Act into plain English and to update some provisions to ensure that they work appropriately in practice.

Codifying generally accepted aspects of Trust Law would also be useful as would allow greater flexibility and bringing further clarification to some areas.

TCA membership now includes the Māori Trustee. The Office of the Māori Trustee operates within its own statutory framework and encounters unique challenges in the discharge of its functions. Accordingly, submissions are made separately on behalf of the Māori Trustee from Te Ao Māori.

Proposed Fee and Levy Changes for the FMA, External Reporting Board, NZ Companies Office, and Insolvency and Trustee Service

Fri, 08 Jul 2011 13:21:19 +1200

Click here to download this submission as a PDF

Submission Excerpt

TCA's General Comments

TCA notes that Cabinet has decided that the additional funding required for the institutions that regulate New Zealand’s corporate environment and financial markets will be sourced from third party fees and levies. While TCA appreciates the concept of industry levies, there is an aspect of the policy which has received no mention. Accountability. In view of the level of funding being sought from industry, accountability and transparency are required from the institutions receiving the levies proposed. As noted, there are no mechanisms suggested that would enable levy-payers to hold the FMA to account for how well the funds were used although work programmes were mentioned. Some accountability is strongly recommended. Typically levy-payers would expect as a minimum an annual business plan, budget and reporting against budget.

The fee for AFA’s associated with a QFE being the same as the fee for those AFAs not associated with a QFE does not take into account the different risk and cost profiles and the differing risks for FMA supervising AFAs associated and not associated to QFEs. QFEs have invested heavily in compliance systems so their AFA’s levy should be reduced to reflect that investment and the reduced risk profile. The wider issue is that the entity and the entity-systems should be the regulator’s focus. Those institutions which had invested heavily in systems to become a QFE are being penalised by the proposed fee structure which ignores the much reduced risk profile of AFAs working for a QFE.

Those financial service providers which have decided not to seek QFE status, not only have to meet their employees’ AFA and RFA annual fees ($680 and $140 respectively) but also have to meet the FMA levy required from financial service providers, ie a further $910 per AFA (and RFA?).

The activities of the regulator that are funded by the FMA levy and those that are funded by the FAA levy, overlap substantially. Both levies cover surveillance and enforcement activities for example, so in effect advisers are being double charged, first for FAA-related surveillance and enforcement and then for surveillance and enforcement conducted by the FMA on non-adviser work. The only cited activity funded solely by the FMA levy is the intelligence function.

As a final comment, TCA notes ultimately the consumer will end up bearing the costs imposed on advisers, further reducing the affordability of professional advice.