This notice comes into force on 1 December 2021 and is revoked on the close of 30 November 2026.

The notice replaces, on substantially the same terms, the Financial Markets Conduct (Overseas Banks Offering Simple Debt Products) Exemption Notice 2016, which is revoked on the close of 30 November 2021.

This notice applies to banks that are licensed, registered, or otherwise authorised to carry on banking business (registered) in overseas jurisdictions that have been determined by the Financial Markets Authority (the FMA) to have regulatory oversight standards that are broadly equivalent to those that apply in New Zealand and to have signed the International Organization of Securities Commissions Multilateral Memorandum of Understanding (specified overseas jurisdictions).

Overseas banks to which this notice applies may, under certain circumstances, offer call debt securities and fixed term deposit products (simple debt products) to New Zealand investors through a lighter compliance path that is similar to that available to New Zealand registered banks.

If the exemptions in this notice apply, overseas banks will not need to comply with the disclosure requirements (including preparation of a PDS) under Part 3 of the Financial Markets Conduct Act 2013 (the Act) when offering simple debt products, or with the governance requirements under Part 4 of the Act (including the need for a trust deed and licensed supervisor) in respect of those products.

This notice also provides that offers of simple debt products made in reliance on this notice are not regulated offers under the Act. This means that legislative requirements that apply to regulated offers, such as financial reporting obligations under Part 7 of the Act, will not apply (unless there is some other reason why they apply).

Any other financial market obligations that an overseas bank may have, including under Part 2 of the Act (which relates to fair dealing), are not affected.

The FMA, after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemptions because—

• New Zealand registered banks have statutory exclusions from large parts of the Act for offers of certain less complex products including call debt securities and fixed term deposit products on the basis that those products are well understood by investors and New Zealand registered banks are subject to prudential regulation and supervision:

• the simple debt products that will be able to be offered by overseas banks in reliance on these exemptions are similar to those offered by New Zealand registered banks and the prudential regulation and supervision that applies to an overseas bank in its specified overseas jurisdiction is broadly equivalent to that applicable to New Zealand registered banks:

• depositors with overseas banks will have access to financial and other information about the simple debt products and the overseas bank that will allow them to assess the risks of entering into the simple debt products and the financial strength of the overseas bank:

• in order to rely on this notice, overseas banks will need to be registered in jurisdictions that have signed the International Organization of Securities Commissions Multilateral Memorandum of Understanding. This will allow the FMA to seek the assistance of the relevant securities regulator should enforcement issues arise:

• without the exemptions, overseas banks may not offer or continue to make available simple debt products to New Zealand retail investors. Overseas banks would face compliance costs associated with monitoring the ongoing residence of their customers and either terminating the banking relationship when a customer moves to New Zealand or alternatively registering in New Zealand:

• the FMA is therefore satisfied that the granting of the exemptions is desirable to promote the purposes of the Act, specifically by promoting the confident and informed participation of businesses, investors, and consumers in the financial markets and avoiding unnecessary compliance costs:

• given the limited application of the exemptions to simple debt products and to banks registered in specified overseas jurisdictions, and the further qualifications and requirements placed on those banks by the conditions, the exemptions are no broader than is reasonably necessary to address the matters to which they relate.