This notice, which comes into force on 29 April 2020, exempts custodians from the duty under the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014 (the Regulations) to obtain an assurance engagement.

The exemption applies to the extent that the duty requires compliance within 4 months after the custodian’s relevant date. The exemption applies if the custodian believes, on reasonable grounds, that it is not reasonably practicable for it to comply within that time frame because of the outbreak of COVID-19. The exemption is subject to conditions that the custodian—

• complies within an extended period of 2 months; and

• notifies the Financial Markets Authority (the FMA) that it is relying on the exemption.

This notice also amends the Financial Advisers (Overseas Custodians—Assurance Engagement) Exemption Notice 2018 and the Financial Advisers (Non-NZX Brokers—Client Money) Exemption Notice 2017 (the class notices). To similar effect, the amendments extend the time frame for complying with a condition by 2 months if the market participant believes, on reasonable grounds, that it is not reasonably practicable for it to comply within that time frame because of the outbreak of COVID-19.

The FMA, after satisfying itself as to the matters set out in section 148(2)(a) of the Financial Advisers Act 2008, considers it appropriate to grant the exemption, and amend the class notices, because—

• compliance with the requirement for an assurance engagement under the Regulations and the class notices within current required time frames has or is likely to become practically difficult for some custodians and brokers as a consequence of the outbreak of COVID-19; and

• in these circumstances, they will require additional time to comply with their obligations; and

• taking a flexible approach and granting extended time for compliance will allow them (and their auditors) to meet the requirements under the Regulations and the class notices in a safe, efficient, and orderly manner and without unnecessary compliance costs; and

• this will also help ensure their processes, procedures, and controls are appropriately and effectively audited; and

• as such, the FMA is satisfied that costs of compliance with the relevant obligations within the original time frame would be unreasonable and would not be justified by the benefit of compliance.