Content of the regulations

252A – CRD records must be readily identifiable and comprehensible

2.1 Under the new section 461V of the FMC Act, CREs must keep climate records that enable CREs to ensure that their climate statements comply with the CRD framework.

2.2 Regulation 252A prescribes further detail of how these records must be kept. It requires every CRE to ensure that its CRD records are readily identifiable and comprehensible. The intent of this regulation is to ensure that, when a request is made to see the records:

• 2.2.1 the records are readily accessible so that they can be provided in a reasonable timeframe
• 2.2.2 they are in a form such that the person requesting them can reasonably determine that section 461V of the FMC Act is being complied with.

252B – CRD records must be kept in English or te reo Māori

2.3 This is a fairly standard regulation associated with record-keeping in legislation, although the addition of te reo Māori in these kinds of regulations is a relatively recent development. As with regulation 252A the intent is to enable the provision of records on request in a reasonable timeframe. Regulation 252B(b) permits the records to be kept in another form other than English or te reo Māori so long as they are readily convertible into English or te reo Māori.

252C – CRD records must be made available in accordance with request

2.4  Under the new section 461Y of the FMC Act – inserted by section 8 of the CRD Act – CREs must make their CRD records available for inspection at all reasonable times and without charge to certain listed parties: the CREs directors, supervisors appointed in relation to a debt security or managed investment scheme, the FMA, or any persons authorised by an enactment to inspect CRD records (such as an assurance practitioner from October 2024).

2.5 Regulation 252C prescribes the manner in which CRD records should be made available for inspection in response to a request.

2.6 The regulation prescribes that the records must be made available in accordance with a written request and that the request may specify the time frame and/or manner in which they are to be made available. If it is unreasonable to meet this request as specified, the CRE must make the records available “as soon as is practicable and in a reasonable manner”.

252D – CRD records kept by another person

2.7 Regulation 252D prescribes that, if a CRE’s records are kept by a third party, the CRE must ensure that the third party keeps the records in such a way that the CRE can comply with its obligations under the FMC Act and regulations in relation to record-keeping.

Transitional provisions

2.8  New Part 9 sets out the transitional provisions in relation to the application of regulation 252D. It provides that regulation 252D does not apply to an arrangement with a third party that was entered into before the commencement of these regulations.

2.9 CREs will have up to two years to amend these arrangements to be compliant with 252D. If the arrangements are amended or renewed within those two years, they must be compliant from that time.

2.10 At this stage we are not proposing any other transitional provisions in relation to the other record-keeping regulations. This means that these regulations will apply to a CRE’s records from the commencement of these regulations.

Infringement fees for minor offences

2.11  Infringement offences provide an administratively efficient method of encouraging compliance by imposing a set of financial penalties and avoiding the formality and costs of court proceedings for relatively minor breaches of the law. The proposed regulations set the infringement fee levels for the new offences at the same level as those prescribed for similar financial reporting offences under Schedule 22 of the Financial Markets Conduct Regulations 2014. The infringement offences and fees are as follows:

FMC Act: s 461W

Failure to keep CRD records in the prescribed manner. 

Fee: $7,500

FMC Act: s 461Y

Failure to make CRD records available in the prescribed manner for inspection.

Fee: $12,500

FMC Act: s 461ZI

Failure to lodge a climate statement within the deadline.

Fee: $7,500

FMC Act: s 461ZJ

Failure by an entity that is a CRE to disclose that it is a CRE in its annual report and to include climate statements (or a link to those statements) in its annual report.

Fee: $5,000

Place where CRD records are to be kept

2.12 At this stage we have not included a regulation prescribing where CRD records are to be kept. We seek your views on whether such a regulation is required and, if so, what form it should take.

2.13 The principal role of such a regulation would be to facilitate the FMA’s inspection of records in the event that a CRE was not complying with its obligations to provide records on request.

2.14 The equivalent provision relating to accounting standards in the FMC Act (section 456) permits accounting records to be kept outside New Zealand as long as those documents required for preparation of financial statements are kept in New Zealand.

2.15 However, it is not clear that a similar approach will work here, as climate records are implicitly defined (in section 461V) as records that enable the CRE to ensure its climate statements are compliant. The FMA would likely require ready access to all these records (not just a subset) to assess compliance.

2.16 We therefore suggest 2, location-based approaches to this regulation:

• 2.16.1 Option 1: Prescribe that CRD records must be kept in New Zealand. In the case of records stored in the cloud, this means that the physical server must be in New Zealand.
• 2.16.2 Option 2: Prescribe that CRD records must be kept in a country listed in the regulations. In the case of records stored in the cloud, this means that the physical server must be in a listed country. For this option, we propose New Zealand, Australia and the United Kingdom as these countries have similar data-protection laws and a close working relationship between regulators.

Any other comments

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