Memorandum of Understanding

between

Financial Markets Authority

and

Reserve Bank of New Zealand

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Memorandum of Understanding dated 18 March 2020

Between Financial Markets Authority (FMA)

And Reserve Bank of New Zealand (RBNZ)

Background

1. The FMA was established under the Financial Markets Authority Act 2011. The FMA’s main objective is to promote and facilitate the development of fair, efficient and transparent markets. It enforces securities, financial reporting and company law as they apply to financial services and securities markets. The FMA also regulates securities exchanges, financial advisers, brokers, trustees and issuers, including issuers of KiwiSaver and superannuation schemes.

2. The RBNZ was established under the Reserve Bank of New Zealand Act 1989. The RBNZ is New Zealand’s central bank and its main functions are to formulate and implement monetary policy to maintain price stability and support maximum sustainable employment, to promote the maintenance of a sound and efficient financial system and to meet the currency needs of the public.

3. The parties work together in areas of common interest.

Purpose

4. The purpose of this Memorandum of Understanding (MOU) is to formalise the relationship of cooperation between the FMA and the RBNZ, recording each party’s commitment to cooperate in a manner that ensures the most effective and efficient regulation of the New Zealand financial system.

5. This MOU sets out the framework for cooperation. Schedules that accompany this MOU set out the protocols relating to specific activities.

Cooperation principles

6. The parties commit to:

   a. Communicate in an open, honest and timely manner.

   b. Respond promptly to requests by the other.

   c. Exchange information and ideas to improve the efficiency and effectiveness of regulation of New Zealand’s financial system.

   d. Work together, so far as is practicable, to avoid duplication of expenditure of taxpayer funded resources.

   e. Forewarn each other of actions to be taken, or proposed to be taken, of which the other might reasonably expect to be advised.

   f. Share training and staff development opportunities, and provide mutual operational support.

   g. Co-ordinate activities such as stakeholder surveys, statistics collection, research work and sector consultation whenever possible and mutually beneficial to do so.

   h. Where either party identifies a harm or potential harm falling within the jurisdiction of the other, to the extent permitted by law, pass all relevant information to the other party as a matter of urgency.

   i. Work together in matters of information sharing, joint investigatory activity, referral of cases or any matters of major supervisory intervention, where mutually beneficial to do so.

   j. Advise each other of any operational or policy concerns through the appropriate channels.

7. Having regard to regulatory and policy development, the parties commit to the following:

   a. Advise the other of any material proposed changes in regulatory policy, guidance or decisions on regulation that may impact on the objectives and/or functions of the other, allowing for appropriate time to consult.

   b. If the implementation of regulatory policy, guidance or decisions on regulation by one party may impact on the objectives and/or functions of the other, that party will notify the other.

   c. When appropriate and whenever it is practical or relevant to do so, both parties will consult each other in relation to relevant policy documents that may be of interest to, or will have an effect on, the other party.

8. Having regard to media releases and statements to third parties (excluding usual engagement with entities that are regulated by the parties, which shall be managed in accordance with the provisions relating to Joint Interest Matters), the parties commit to consult with the other before providing information or comment on a matter which falls within the other party’s responsibility or in which the other party has an interest.

Joint Interest Matters

9. At times the parties may both have an interest in a matter according to their statutory objectives that they may choose to declare that matter a Joint Interest Matter.

10. When a matter is declared as such, the parties can record the operational protocols in regards to cooperation and information sharing specific to that Joint Interest Matter in a schedule to this MOU. That schedule may be determined confidential if appropriate.

11. Below is a non-exhaustive list of the types of operational protocols the parties may wish to cover in the schedule:

    • Key contact persons;
    • Provision of documents including method and mode;
    • Operational meetings including frequency and record taking;
    • Level of engagement including particulars about what will be shared;
    • Authority to disclose confidential information; and
    • Use, storage and retention of information.

12. A Joint Interest Matter schedule will be prepared by the parties in accordance with this MOU and the parties’ empowering legislation. The information sharing protocols in Schedule 1 will apply unless the protocols in the Joint Interest Matter schedule expressly depart from them.

13. Schedule 2 provides a template schedule for a Joint Interest Matter.

Review of MOU and schedules

14. The parties will review the operational effectiveness of the MOU at least once per annum.

15. Modification or termination of the MOU and/or any of its schedules, and/or the addition of new schedules, may be undertaken by the mutual agreement of the parties.

16. Either party may terminate the MOU and/or any of its schedules by giving three months’ notice in writing to the other party.

Issue or dispute resolution

17. All issues, disputes and differences between the parties about the interpretation or performance of this MOU will be resolved at the earliest opportunity by operational representatives or managers, wherever possible.

18. Only when matters remain unresolved or require further adjudication should they be referred to the parties’ senior management representatives being the persons notified in writing by the parties from time to time.

Costs

19. Unless the parties mutually determine otherwise, each party shall meet its own costs of meeting the commitments of this MOU.

Legal

20. Nothing in this MOU shall make either party liable for the actions of the other or constitute any legal relationship between the parties.

21. Nothing in this MOU is intended to limit or affect the independence of either party or affect their statutory obligations.

22. The provisions in this MOU are to be read subject to any Chief Executive or Cabinet directives, and any enactment, regulations or rules.

23. Where there are changes to Government policy which affect the purpose and functions of this MOU, each party agrees to inform the other of those changes at the earliest possible time thereafter and to re-negotiate any aspects of the MOU if necessary.

24. This MOU repeals and replaces the MOU between the FMA and the RBNZ dated 9 September 2011.

25. The parties’ operational representatives for this MOU are:

    FMA James Greig, Head of Supervision james.greig@fma.govt.nz Telephone: 09 300 0421

    RBNZ Scott McKinnon, Manager, Banking and FMI Supervision scott.mckinnon@rbnz.govt.nz Telephone: 04 471 3937

Signed by the Chief Executive of the Financial Markets Authority

[Signature] Rob Everett Date: 18 March 2020

Signed by the Governor of the Reserve Bank of New Zealand

[Signature] Adrian Orr Date: 17/3/2020. St Patrick's Day.

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Schedule 1 Information Sharing

Between Financial Markets Authority (FMA)

And Reserve Bank of New Zealand (RBNZ)

Purpose

1. The purpose of this schedule is to facilitate the sharing of information, where appropriate, to enable the parties to achieve the objectives of the Memorandum of Understanding (MOU) between the parties dated 18 March 2020.

Principles

2. The parties agree to make relevant information available to the other, subject to any legislative requirements, in a timely and efficient manner.

Statutory Framework

3. Information provided by the FMA to the RBNZ under this MOU is pursuant to sections 30 and 59(3)(d) of the Financial Markets Authority Act 2011.

4. Information provided by the RBNZ to the FMA under this MOU is pursuant to:

   • Sections 105 and 156G of the Reserve Bank of New Zealand Act 1989;
   • Sections 54 and 55 of the Non-bank Deposit Takers Act 2013;
   • Sections 135, 136 and 137 of the Insurance (Prudential Supervision) Act 2010; and
   • Section 139 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

Confidential information

5. Confidential information is information covered by confidentiality provisions in statute or subject to a confidentiality order or non-disclosure agreement.¹

6. When confidential information is exchanged between the parties, both parties agree to treat the information as the home party would, and commit to:

   • Keep the information secure; and
   • Only access the information for legitimate business purposes.

7. Both parties agree not to disclose confidential information to any third party without the consent of the other party unless such disclosure is required, authorised or permitted by law, subject to the following:

   a. If a party is required by law to disclose to a third party, information that has been provided by the other party under this MOU, the party must, prior to disclosure, notify the other party in writing with reasonable notice so as to enable the other party to determine what action, if any should be taken. Consent to disclose is not required.

   b. If a party is authorised or permitted by law to disclose to a third party, information that has been provided by the other party under this MOU, the party must, prior to any disclosure, consult with the other party before making any decision regarding the disclosure. If a party is minded to disclose the information, the party should notify the other of its proposed reasoning for doing so. Consent to disclose is not required.

Format and timing of requests

8. Requests for information from the other party will be made in writing to the following designated persons:

   FMA questions@fma.govt.nz Attention: Relevant operational manager

   RBNZ rbnz-info@rbnz.govt.nz Attention: Relevant operational manager

9. Oral requests may be made in emergency situations if any delay could have a substantial negative impact on the purpose for which the information is sought.

10. Oral requests will be followed up by a written request as soon as practicable, or as agreed at the time of the request.

11. Requests for information will specify:

    • The information required (identifying the documents or information sought, identity of relevant individuals, addresses, etc);
    • The purpose for which the information is sought;
    • The timeframe in which the information is needed, and the reasons for any urgency requested; and
    • Any other relevant matters.

12. The parties agree to respond to requests for information as soon as practicable, and in any event within the timeframe agreed. In the case of an urgent request, the parties will consult to ensure a response to the request is expedited if possible.

Sharing of other information

13. The parties agree to proactively share information or intelligence where this is consistent with the principles of this schedule and the MOU, even if no specific request has been made by the other party.

Use, storage and retention of information

14. Any shared information will only be used by the receiving party for legitimate business purposes and in line with the law and the party’s policies, processes and systems.

15. The party providing the information will indicate the level of sensitivity that applies to the information or any part of the information, where appropriate.

16. The parties agree that shared information will be stored with appropriate security measures, whether the information is in electronic form, hard copy documents or otherwise.

17. The parties acknowledge that if any criminal proceedings are initiated, the Criminal Disclosure Act 2008 will apply in relation to all relevant information held by the prosecuting party.

18. The parties acknowledge that if any civil proceedings are initiated, the High Court Rules 2012 will apply in relation to all relevant information held by either party.

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¹ Unless the specific terms permit it to be shared.

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Schedule 2 Joint Interest Matter TEMPLATE dated 2020

Between Financial Markets Authority (FMA)

And Reserve Bank of New Zealand (RBNZ)

Purpose

1. The purpose of this schedule is to facilitate the effective and efficient cooperation between the parties by recording the operational protocols in regards to cooperation and information sharing relating to the Joint Interest Matter of [name of matter].

Background

2. By Memorandum of Understanding dated 18 March 2020 (MOU) the parties set out that at times they may both have an interest in a matter according to their statutory objectives that they may choose to declare a Joint Interest Matter.

3. When a matter is declared as such, the parties can record the operational protocols in regards to cooperation and information sharing specific to that Joint Interest Matter in a schedule to the MOU.

Joint Interest Matter

4. The parties have declared [name of matter] to be a Joint Interest Matter and wish to record how they agree to cooperate and share information in respect of this matter in accordance with the MOU and the parties’ empowering legislation.

5. The information sharing protocols in Schedule One will apply unless the protocols in the Joint Interest Matter schedule departs from them.

[Operational matter number 1 e.g., Provision of documents

6. The parties agree that all documentation will be exchanged between parties via a secure shared drop box facility. The documents will be stored in the shared dropbox and can/cannot be copied into the receiving party’s information management system without prior approval from the sender party.

Operational matter number 2 e.g., Particulars of information to be shared

7. The parties agree to share all information received from third parties, all internal working papers and all internal and external correspondence on the matter.]

8. Each party agrees to consult with the other before providing information or comment on a matter which falls within the other party’s responsibility or in which the other party has an interest as noted below:

[insert any specific agreed requirements re stakeholders]