The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko has suspended the crowdfunding provider licence of The Property Crowd after the entity materially contravened its licensee obligations.
The Property Crowd (TPC) has had financial reporting failures, been deregistered from the Financial Service Providers Register (FSPR) and has had ongoing compliance issues. Consequently, the FMA concluded TPC was likely to materially contravene its licensee obligations, may not be able to effectively perform the services under its licences, and the conditions were satisfied for suspending TPC’s licence. More specifically:
- The FMA found TPC breached the standard conditions of its licence and Financial Markets Conduct Act 2013 (FMC Act) requirements by late filing of certain financial reports¹.
- TPC was deregistered from the Financial Service Providers Register (FSPR) for failing to file its annual return. Crowdfunding licensees are required to be registered on the FSPR.
- TPC has had ongoing compliance issues and failed to provide the FMA with sufficient information about how TPC will improve its systems, processes, and documentation to prevent further issues.
TPC was granted a licence by the FMA on 18 October 2018 but has not hosted a successful offer since (i.e. an offer meeting the minimum funding amount) and no investors currently use its platform. However, in January 2021 Singapore-based Property Strata Pte Ltd acquired 75% of TPC’s shares and signalled an intention to relaunch its service.
Paul Gregory, FMA Acting Director of Capital Markets, said: “Ongoing non-compliance shows TPC has a poor understanding of its regulatory obligations and the ongoing lack of information from TPC hinders the FMA from effectively carrying out our supervisory functions. So, investors cannot make informed decisions about whether to invest on TPC’s platform and their money could be at risk.”
“Suspending a licence is a significant step which should be considered carefully. But we concluded it was the appropriate response to TPC’s overall pattern of compliance issues, while giving TPC the opportunity to demonstrate effective compliance and re-enter the market,” Mr Gregory said.
TPC has provided the FMA with a preliminary remediation action plan for improving compliance. The plan will be worked through with the FMA prior to any relaunch. The FMA notes TPC has been cooperative throughout this process.
