The following is a press release announcement from the FMA.
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has suspended the crowdfunding provider licence of The Property Crowd after the entity materially contravened its licensee obligations.
The Property Crowd (TPC) has had financial reporting failures, been deregistered from the Financial Service Providers Register (FSPR) and has had ongoing compliance issues. Consequently, the FMA concluded TPC was likely to materially contravene its licensee obligations, may not be able to effectively perform the services under its licences, and the conditions were satisfied for suspending TPC’s licence. More specifically:
- The FMA found TPC breached the standard conditions of its licence and Financial Markets Conduct Act 2013 (FMC Act) requirements by late filing of certain financial reports¹.
- TPC was deregistered from the Financial Service Providers Register (FSPR) for failing to file its annual return. Crowdfunding licensees are required to be registered on the FSPR.
- TPC has had ongoing compliance issues and failed to provide the FMA with sufficient information about how TPC will improve its systems, processes, and documentation to prevent further issues.
TPC was granted a licence by the FMA on 18 October 2018 but has not hosted a successful offer since (i.e. an offer meeting the minimum funding amount) and no investors currently use its platform. However, in January 2021 Singapore-based Property Strata Pte Ltd acquired 75% of TPC’s shares and signalled an intention to relaunch its service.
Paul Gregory, FMA Acting Director of Capital Markets, said: “Ongoing non-compliance shows TPC has a poor understanding of its regulatory obligations and the ongoing lack of information from TPC hinders the FMA from effectively carrying out our supervisory functions. So, investors cannot make informed decisions about whether to invest on TPC’s platform and their money could be at risk.”
“Suspending a licence is a significant step which should be considered carefully. But we concluded it was the appropriate response to TPC’s overall pattern of compliance issues, while giving TPC the opportunity to demonstrate effective compliance and re-enter the market,” Mr Gregory said.
TPC has provided the FMA with a preliminary remediation action plan for improving compliance. The plan will be worked through with the FMA prior to any relaunch. The FMA notes TPC has been cooperative throughout this process.
¹ This refers to The Property Crowd failing to:
- ensure audited financial statements were delivered to the Registrar of Financial Services within four months after balance date for the financial years ending March 2022
- provide a copy of its Agreed Upon Procedures report, along with a copy of its net tangible assets calculation, to the FMA upon time for the year ending March 2022
5 Comments
I am not an advocate for The Property Crowd, but I think we should be extremely wary of the handling of its case by the FMA ("Hokuhoku")
Reading statements such as..."the (preliminary) remediation plan....will be worked through with the FMA...(which) notes TPC has been cooperative throughout this process"... tells me we are moving further away from that concept known as the "rule of law" which arguably underpins the comparatively recent governing system of democracy.
We seem to be moving ever closer, or perhaps better termed,..'moving back' to a system of government by decree. ie whereby Parliament enacts broad authorizations to either the Executive branch of government (Cabinet), or to appointed "authorities" (eg FMA) to do the 'right thing' with regard to complex field such as say, banking, of which ordinary Parliamentarians ( our elected representatives) have little or no understanding.
In effect this means that increasingly we ordinary citizens faced say, with running a small business, or starting a building project, find it easiest to just ask the nice man at the ministry, what we have to do to "be approved" . Usually this will involve a stiff 'fee'!
By contrast, the rule of law requires Parliament to legislate the specific terms of what is permissible and what is not. Then we citizens can get on with life knowing that if we do the forbidden we may be brought before a court, independent of government, to account for our transgressions.
In my opinion the FMA, like many of its ilk has two major priorities. 1. To raise funding to support them in a manner they find comfortable. 2. To avoid public criticism which might cause Parliament to question their further existence. The rest of their functioning is mere detail, dealing with miscreants, especially anybody who may be publicly, err, "difficult". Their major weapon is to remove any licences to operate. Of course affected people can appeal to our court,...... very expensive, much better to submit and pay the authority's eye-watering consent fee which will no doubt have to be paid even with a favourable court judgement.
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