Most Read Contributor in New Zealand, September 2016
The Financial Markets Authority (FMA) and the
Commerce Commission have signed a Memorandum of Understanding on
how they will manage the interface between their respective
While the MOU is useful, the lack of clarity around the
roles of the two regulators remains.
The boundary issue
The Financial Markets Conduct Act 2013, for which the FMA is the
regulator, contains a suite of provisions governing misleading and
deceptive practices in connection with financial products and
The Fair Trading Act 1986 (FTA), which is regulated by
the Commerce Commission, governs misleading and deceptive conduct
(sections 9 to 13) in relation to goods and services. But the
definition it uses for what constitutes a good or service is broad,
creating a risk of overlap between the two regimes.
The FTA now requires that the Commerce Commission must obtain
the consent of the FMA before commencing civil or criminal
proceedings for contraventions of sections 9 to 13 involving
financial products or financial services. The FMA is required to
take account of a number of factors in making its decision but has
a relatively wide discretion.
However, the proceeding will not be invalidated if consent is
the FMA is the primary regulator for misleading and deceptive
conduct in relation to financial products and financial services,
the Commerce Commission is the primary regulator for misleading
and deceptive conduct in relation to consumer credit conduct.
Curiously the MOU states that the Commission "may
seek consent from FMA permitting it to bring proceedings under the
FTA in relation to financial products and financial services".
But on our reading of the FTA, the requirement is mandatory not
permissive. It is only if consent is not obtained, that the
Commission may still commence proceedings.
Beyond that, the interaction between the two regimes remains an
uneasy one and not easily navigable. If a supplier is facing an
investigation under either piece of legislation, it would be wise
to assume that the regulators will collaborate. Any strategic
response needs to take into account exposures on both fronts.
So what do we know about the enforcement priorities?
At this stage, not a great deal. As independent Crown entities,
both are required to produce statements of intent, which will
include disclosure of output classes with money from Vote Commerce
allocated to each class. In the case of the Commerce Commission
this can provide a valuable indication of where the Commission is
placing its enforcement focus. These statements are due out around
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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