In the recent case Vivier and Company v Financial Markets Authority [2015] NZHC 2337, the High Court overturned the Financial Markets Authority’s (the FMA) exercise of its power to deregister a Financial Service Provider (FSP) (Vivier), on the basis that the FMA breached its obligations of natural justice.  This case illustrates the first appeal of the deregistration process under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSP Act).  The judgment provides a useful insight into the valid direction of deregistration under the FSP Act.  In particular, 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 as a deciding factor for deregistration;
  • the purpose of the FMA’s powers of deregistration under section 18A of the FSP Act must be considered before the FMA deregisters an FSP;
  • consideration of deregistration should be approached with an open mind;
  • deregistration should not be founded solely on generalisations and complaints from other FSPs; and
  • to reach the relevant threshold of deregistration, it must be shown that the FSP has in some way created a misleading appearance as to the extent to which it is licensed or regulated, or otherwise damages the reputation of New Zealand’s financial markets.