Introduction

Background

1.1 The Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 (CRD Act), legislated for a new climate reporting regime. The CRD Act requires climate reporting entities (CREs) to disclose their climate-related risks and opportunities by filing annual climate statements. CREs include large financial market institutions such as issuers, banks, insurers, credit unions, building societies and investment scheme managers who meet the specified thresholds. The FMA have identified approximately 170 entities which qualify as CREs; however, this number may fluctuate over time as entities fall below or meet thresholds.

Reporting process

1.2 The climate statements must be prepared in compliance with standards issued by the External Reporting Board (XRB), and the regulatory responsibilities will be carried out by the Financial Markets Authority (FMA) who independently monitor and enforce compliance with the regime. Climate statements must then be lodged with the Registrar of Financial Service Providers at the Companies Office within four months after the balance date of the entity.

What these regulations cover

1.3 Among other provisions in the CRD Act are high level obligations relating to record-keeping and the ability to set infringement fees, with the detail for these matters to be prescribed in the regulations. In November 2022, Cabinet agreed to the drafting of regulations prescribing record-keeping requirements, record-inspection requirements, and setting infringement fees for minor offences.

1.4 These regulations will amend the Financial Markets Conduct Regulations 2014 by:

  • 1.4.1 inserting a new part 7A setting out record keeping and inspection obligations
  • 1.4.2 inserting a new part 9 into Schedule 1 covering transitional provisions
  • 1.4.3 amending Schedule 22 to set out the new infringement fees.

1.5 The 'Content of the regulations' page will further discuss the content of the regulations and questions for each issue will be attached to provide a framework for submissions. However, we welcome any additional comments you may have.

Content of the regulations 

Timing

1.6 Once the consultation period has closed, we will analyse submissions, provide advice to the Minister of Commerce and Consumer Affairs on any changes we recommend and amend the regulations as necessary.

1.7 It is our intention that these regulations will be finalised before the House rises for the election, meaning that the new regulations would commence by the end of September 2023. However, we recognise that the timeframes to achieve this are tight.

FMA guidance

1.8 We have consulted with the FMA in the preparation of these regulations. The FMA are working on guidance material to support CREs to comply with their record-keeping obligations in the FMC Act and these regulations and intend to consult on this at the same time as this consultation.

1.9 The FMA is also preparing 3 information sheets to support CREs with various aspects of the compliance with the CRD regime, and these will be released shortly.