Financial Markets Authority Issues Warning to Finbase Over Breaches

The Financial Markets Authority (FMA) has issued a warning to investment firm Finbase, also known as HP Capital Ltd, due to significant breaches related to disclosure and fair dealing. The regulatory body’s concerns center on the promotion and advertising of Finbase’s Single Investment financial products.

According to the FMA, Finbase failed to comply with essential disclosure requirements outlined in Part 3 of the Financial Markets Conduct Act 2013 (FMC Act). The authority highlighted that the company did not meet its notice obligations regarding the Small Offers exclusion in the Financial Markets Conduct Regulations.

In response to the FMA’s warning, Finbase stated that the breaches resulted from incorrect legal advice it received prior to promoting these financial products. The firm emphasized that, despite the errors, no investors suffered financial losses.

Details of the Breach

Finbase acknowledged the gravity of the situation, explaining that it sought legal counsel from a reputable New Zealand law firm before launching its Single Investment financial products. Unfortunately, the firm claims that the legal advice was misleading, which led to the current regulatory issues.

“While we took proactive steps to ensure compliance, the advice provided was unfortunately inaccurate, contributing to the breaches identified by the FMA,” the company said in a statement.

The FMA’s warning serves as a reminder for investment firms regarding the importance of adhering to regulatory standards. Non-compliance can not only lead to regulatory action but can also damage a firm’s reputation and investor trust.

As the situation unfolds, the FMA continues to monitor Finbase’s actions in addressing the breaches. The authority aims to ensure that all financial service providers uphold their responsibilities to maintain fair dealings and transparent operations in the market.

Finbase is now expected to rectify these compliance issues and demonstrate its commitment to adhering to the legal standards set forth in the FMC Act. The firm’s ability to regain investor confidence will depend on its response to this warning and subsequent actions taken to prevent similar issues in the future.