The 21st century has seen an escalating regulation of the banking industry whereby it has become increasingly difficult to obtain a banking license with increasing government controls and requirements. The use of the word bank creates immediate compliance issues including capital/lending ratios, minimum founding capital requirements and central bank regulation of the institution so much so that few can now meet the onerous requirements of most jurisdictions including the traditional offshore tax havens. New Zealand has however legislated for the fast and relatively uncomplicated creation of a corporation which can operate virtually in the same manner as a bank whilst avoiding the restrictive controls of banking legislation. Under the Financial Service Providers (Registration and Dissolution Act 2008 (‘the Act’), a New Zealand company can be registered as a financial services provider. This means that the company is effectively registered by the Ministry of Economic Development to offer financial services or in the words of the legislation becomes a financial services provider.
The meaning of ‘financial service’ is defined in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. There are some exceptions set out in section 7 of the Act, such as lawyers and accountants who provide financial services as an incidental part of their business.