The first appeal against deregistration by a financial
services provider (FSP) has succeeded after the High Court
found that the Financial Markets Authority (FMA)
failed to observe principles of natural justice.
At least one further deregistration case has been
lodged, and it may not be the last.
Practical implications
The case challenges the breadth of the recent amendment which
sought to allow the FMA to deregister foreign-controlled financial
services companies that purport to operate in New Zealand in order
to imply New Zealand's regulatory oversight.
It demonstrates that the test for deregistration may be too hard
for the FMA to establish in some instances. The Court held that it
is "insufficient for the FMA to rely solely on the fact that
an FSP does not provide services in or from New Zealand in order to
come to the conclusion that deregistration is necessary or
desirable".
