Property syndicator gets financial regulator tick
Commercial property syndicator Oyster Group is one of the first companies in the sector to obtain a managed investment scheme licence from the Financial Markets Authority.
Oyster Group promotes its syndicates to retail investors and carries out the property management and leasing.
Offerings have included retail, industrial and office buildings. The most recent is the $210 million Millennium Business Centre in Auckland, which is one of the largest syndications to be marketed in New Zealand, with Oyster offering 448 investment parcels at $250,000 each.
Under the Financial Markets Conduct Act, registered managed investment schemes must have a licensed manager because they pool money from a number of investors who rely on the investment expertise of the scheme manager.
Oyster chief executive Mark Schiele said the requirement for all managers of investment products to be licensed will lift industry standards and give investors confidence.
‘‘This is a major step up in the regulation of the financial markets. The hurdle to licensing is set high and will weed out those operators who don’t have the skills, staff and robust processes required to be a licensed manager.’’
He said the most visible change for investors will be the introduction of new offer documents.
Investment statements and prospectuses will be replaced by a single product disclosure statement, which will present information on offers and investments in an ‘‘investor-friendly format’’, Schiele said.
A lot of the information will appear in tables to allow for easy comparison with other financial products. Schiele said this should make offer documents easier to read and more informative.
Managers of investment products are the last of the financial service providers to be licensed, with financial advisers and statutory supervisors having already completed the process.
Schiele said the process to get licensed was not simple.
The application required the manager to show that its staff and directors were fit and proper persons to manage investment products and that they had the necessary experience to be effective in the role.
Business processes and compliance programmes had to be put in place to demonstrate the business had the ability to comply with the legislation.
The manager is required to report on compliance issues regularly to the statutory supervisor for each scheme and to the Financial Markets Authority.