New Zealand’s FMA Seeks Opinions Regarding Responsible Investment Products

New Zealand’s FMA Seeks Opinions Regarding Responsible Investment Products

New Zealand’s FMA Seeks Opinions Regarding Responsible Investment Products

The Financial Markets Authority in New Zealand is trying to develop a strategy on how several responsible investment products and green bonds must be described, labeled, and promoted to the score of investors. The authority has sought views in this regard.

FMA General Counsel and Acting Co-Head of Capital Markets Nick Kynoch claimed that the demand for responsible and sustainable products is surging. Nick said, “In response, issuers and providers are now offering an increasing array of products. While the FMA supports the development of the market for these products, there are associated risks and issues largely arising from the lack of common understanding of what makes an investment responsible.”

Now, FMA has decided to invite feedback prior to issuing the official guidance for the market which will aim to offer a clear perspective to the investors on what they have been offered and what risks will it involve.

As the popularity of green bonds and investment products is on the rise, it is important to ensure that investors remain protected from greenwashing and they obtain clarity of what is on offer. The investors must be able to decide how green, ethical, and responsible a financial product will be.

The FMA’s guidance will not highlight the prescriptive definition of green, ethical, and responsible. However, it will highlight the anticipation for issuers and product providers about ideal behavior and ideal revelation so that investors can make the correct and informed selection.

Presently, all the responsible investment products and other regulated offers need to mention key features, advantages and likely returns to the investors in compliance with Part 3 of the Financial Markets Conduct and other associated Regulations. All the investment products need to conform to the unbiased dealing provisions in Part 2 of the FMC Act which forbid deceptive behavior, incorrect or ambiguous depiction and unconfirmed speech in connection to all the offers of financial services and products.

“We are satisfied the current law is flexible enough to accommodate responsible investment products. But in an area like this, with a lack of consistent, agreed-upon definitions, we are keen to benchmark what good conduct and good disclosure look like, to ensure issuers focus on meeting investor needs,” added Kynoch.

Submissions on the draft guidance are slated to close on October 24 this year. The FMA is likely to issue the final guidance at the end of 2019 which will also include key details for the investors regarding the risks and features of various types of responsible investments. It will also include questions that the investors must ask from the product and service providers before making an investment.

Earlier, New Zealand had legalized the crypto payment from September 1, 2019. As of now, some countries have banned trading of cryptocurrency. New Zealand’s Inland Revenue Department had issued a statement mentioning digital currencies can be used for making payment of employees’ salaries in the country.

According to a report, employers may get several cases wherein they will be allowed to pay employees’ salaries via cryptocurrencies. However, the rule will be applied only to salary or wage workers. The self-employed workers will not be allowed to enjoy the advantages which may include payment for services gratuities, commission, and bonuses.