FMA Issues Formal Warning To Vanguard

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - hasissued a formal warning to Vanguard Investments Australia Limited (Vanguard), for failing to lodge a required notice on the New Zealand Companies Office Disclose Register. A notice should have been lodged of an exercise of power taken against it, by the Australian Securities and Investment Commission (ASIC).

On 11 November 2022, Vanguard was issued three infringement notices by ASIC regarding the disclosures included in the offer documents of three funds, offered to Australian investors.

These funds are also offered to New Zealand investors through the Trans-Tasman Mutual Recognition regime (MRSO regime).

The MRSO regime allows Australian financial product issuers to operate in New Zealand without needing to comply with all the provisions of the Financial Market Conduct Regulations 2014 (FMC Regs) on the basis that ASIC undertakes core supervisory action.

Under regulation 273(7) of the FMC Regs, Vanguard was required to provide the Disclose Register with notice of enforcement action or use of a power by the ASIC no later than 18 November 2022. This is to ensure that New Zealand investors are informed of any such action.

Following intervention from the FMA, Vanguard filed its notice on 2 February 2023, 55 business days after the infringement notices were issued.

The FMA is satisfied that Vanguard has materially failed to meet its obligations under the FMC Regs by failing both to identify its obligations, and failing to have adequate processes in place to ensure that it filed the required notice within the required timeframe.

Paul Gregory, FMA Executive Director of Regulatory Response, said: “There are serious consequences for failing to meet these obligations, and Vanguard’s breach, if not addressed, could harm the integrity of the Trans-Tasman Mutual Recognition regime. Compliance with the requirements of the MRSO regime supports fair, efficient and transparent markets in NZ, and the FMA will take regulatory action, where necessary. It is important that issuers taking advantage of the MRSO regime understand and attend to their obligations. In this case a formal, public warning was appropriate.”

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