Vanguard formally warned by NZ’s FMA

Yasmine Raso

Senior Journalist, Financial Newswire

29 March 2023

Vanguard Australia has received a formal warning from New Zealand’s corporate regulator, the Financial Markets Authority (FMA), after the firm did not file the required notice of action taken against it by the Australian Securities and Investments Commission (ASIC).

In an announcement, the FMA said it was satisfied the fund manager had “materially failed to meet its obligations under the Financial Market Conduct Regulations 2014 (FMC Regs)” after it did not “identify its obligations” and did not have “adequate processes in place to ensure that it filed the required notice within the required timeframe”.

The warning is in related to three infringement notices handed down to Vanguard on 11 November last year regarding alleged greenwashing claims of its funds available to Australian investors, which are also offered to New Zealand investors through the Trans-Tasman Mutual Recognition regime (MRSO regime).

The regime allows Australian issuers to offer their products in New Zealand without complying with all the provisions contained in the FMC Regs as long as ASIC completes “core supervisory action”.

Vanguard was required to lodge notice with the New Zealand Companies Office Disclose Register that there had been enforcement action or use of power by ASIC no later than one week after the infringement notices were issued by Australia’s corporate regulator.

The fund manager filed its notice on 2 February 2023 after the FMA intervened, 55 business days after the infringement notices were issued.

“There are serious consequences for failing to meet these obligations, and Vanguard’s breach, if not addressed, could harm the integrity of the Trans-Tasman Mutual Recognition regime,” Paul Gregory, FMA Executive Director of Regulatory Response, said.

“Compliance with the requirements of the MRSO regime supports fair, efficient and transparent markets in NZ, and the FMA will take regulatory action, where necessary.

“It is important that issuers taking advantage of the MRSO regime understand and attend to their obligations. In this case a formal, public warning was appropriate.”