Appeals expected after 100 companies deregistered

  • 24/08/2015
High Court (File)
High Court (File)

By Suze Metherell

The Financial Markets Authority is expecting a wave of appeals after deregistering 100 companies from the Financial Service Providers register, as it awaits a High Court ruling on Vivier & Co's appeal.

Appearing in the High Court at Wellington, the financial market watchdog's counsel Mary Scholtens QC said the hearing was the first appeal of a deregistration since FMA was granted the powers under the Financial Service Providers (Registration and Dispute Resolution) Amendment Act 2014.

The government and regulator were concerned shell companies were registering as financial service providers in New Zealand to trade on the country's reputation for not being corrupt.

Registration requires companies offering financial services in New Zealand or to offshore clients from the country to join an approved disputes resolution scheme.

"Parliament has recognised if registration creates misleading appearance of regulation in New Zealand then that may damage New Zealand's reputation overseas," Ms Scholtens said.

Last year, FMA asked Vivier to remove references to FMA regulation and the regulator's logo from the website because it might be misleading to international clients.

The Auckland-based company's chief executive is Luigi Wewege, who shot to prominence Zealand after being involved in revealing Auckland Mayor Len Brown's affair while working for mayoral contender John Palino.

On his personal website, Mr Wewege says he founded the parent company Vivier Group and is managing director of its sister companies Vivier Investments, Vivier Developments, Vivier Home Loans and Vivier Mortgages.

In April, the regulator notified Vivier it would be removed from the Financial Services Providers Register because it didn't believe the company was providing financial services in New Zealand and therefore didn't require registration.

Vivier counsel Andrew Riches said the FMA only began to investigate the firm after a member of the public passed on an Interest.co.nz online news article, which linked the company to sub-prime mortgages in Ireland, and questioned whether that reflected badly on the reputation of New Zealand's financial regulation.

"Bodies shouldn't make decisions based on newspaper articles," Mr Riches said.

The FMA denies it deregistered Vivier as a result of the article although the regulator did say it started investigating Vivier after the article noted that the Department of Internal Affairs was no longer overseeing Vivier under anti-money laundering and countering financing of terrorism legislation.

Further investigation, including a site inspection of the Auckland offices by the Ministry of Business, Innovation and Employment, showed little evidence of activity in the office other than some administrative work.

Justice Timothy Brewer has reserved his decision.

NZN