FAIR DEALING POLICY

 

  • Purpose

 

ChangeFund’s mission is to always put people first.  To achieve our mission, it’s important that we are clear with our dealings with our investors, borrowers and staff.  

Under the Financial Markets Conduct Act 2013 (the Act) and the Regulations under the Act, ChangeFund is required to have in place a fair dealing policy. Part 2 of the Act provides for fair dealing in relation to financial products and financial services. (Fair Dealing Sections)

 

Financial Markets Conduct Act 2013 (FMC Act) – The FMC Act governs how financial products are created, promoted and sold, and monitors the compliance of the financial markets participants who offer, deal and trade them.

 

This policy focuses on Management’s responsibilities for delivering fair dealing outcomes. This policy applies to selection, marketing & distribution of any financial products, assessing the credit-worthiness and verification of our borrowers and verification of our investors using the Peer-to Peer platform. It also covers responsibilities for loan drawdown service and complaints handling.

 

Five fair dealing outcomes that revolve around the following principles:

  1. Investors and Borrowers have confidence that when they deal with ChangeFund, fair dealing is central to our corporate culture
  2. ChangeFund offers products and services that are suitable for our target customer segments
  3. ChangeFund has competent staff who provide quality advice
  4. Investors and Borrowers receive clear, relevant and timely information to make informed financial decisions
  5. ChangeFund handles complaints in an independent, effective and prompt manner

 

 

  • Application of the Policy

 

This policy applies to all financial products offered by ChangeFund Limited over the phone, through interactive electronic devices, on the internet or by any other method and shall be applicable to citizens and permanent residents of New Zealand.

 

  • Scope

 

We have identified the following key criteria as the measurement of our progress and these are endorsed by the following set of guiding principles:

  1. Fair Dealing will be led by Senior Management and be the responsibility of all employees of ChangeFund
  2. We will perform reviews of our policies, systems and processes to ensure that our market and business conduct practices achieve the fair dealing outcomes
  3. Fair Dealing will be regularly reviewed at senior management meetings, evidenced from both agenda and minutes relating to these meetings
  4. Fair Dealing will be one of the performance measures of ChangeFund’s business teams
  5. ChangeFund’s Fair Dealing Policy will be available to you at www.changefund.co.nz

 

 

  • Customer Sustainability

 

  1. We will undertake formal due diligence on all products mentioned hereinabove we intend to distribute, in order to:
    1. assess and fully understand the features and risk-reward characteristics of our product
    2. identify customer segments for which our product is suitable, & customer segments for which our product is clearly not suitable
  1. Product due diligence process will include a thorough review of the disclosure statement, fee schedule, product highlights sheet, factsheet, marketing materials and other representations from ChangeFund
  2. For investors, we will consider, among other matters
  1. whether they are able to understand the product, given its risk-reward characteristics and level of complexity
  2. whether the product’s investment objectives, risk-reward characteristics and associated fees have been distributed
  3. the competency of our staff and their ability to understand the product features and risk-reward characteristics
  4. whether our systems and processes, including “fact-find” forms, risk profiling questionnaires and other documents, are able to support the promotion of the product
  1. We will tailor our marketing approach to the profiles, financial objectives, and general financial literacy of target customer segments
  2. We will clearly communicate to our staff, the target customer segments and key features and risk-reward characteristics of each product and service we offer
  3. We will pay special attention when marketing products of which our clients have limited knowledge and will encourage them to opt for a full “fact-find” to ensure that the product suits their financial objectives and personal circumstances. We will also ensure that they are provided with relevant information, in a manner easily understood by them.

We will not assume that a product is suitable for all. We will take steps to identify profiles and circumstances for which the product is not suitable, and have robust controls to prevent inappropriate promotion of the product.

 

 

  • Borrowers

 

We aim to identify and exclude users if they:

  • engage in conduct that is misleading or deceptive or likely to mislead or deceive
  • make a false or misleading representation in contravention of section 22 of the Financial Market Conduct Act; or
  • make unsubstantiated representation in contravention of section 23 of the Financial Markets Conduct Act

 

How we achieve this:

  • Reviewing each loan application before it is offered on the ChangeFund lending platform
  • Identity checks will be carried out by ChangeFund on borrowers prior to loans being offered on the platform
  • Assess the credit-worthiness of the borrower through our credit score process
  • Ensure all information as set out in the application process is provided
  • If a staff member identifies conduct that may breach the Act, then such conduct shall be referred to Director of Operations, who shall investigate whether the conduct breaches the Act

 

Suspending or cancelling service

  1. i) If, before a loan application is offered on the lending platform, the relevant borrower is identified  as having breached the Act, ChangeFund will:

(a) Refuse to offer the loan application on the platform and notify the borrower;

(b) Suspend or cancel any or all of our services to the borrower

(c) Retain a copy of the loan application

(d) Publish a statement relating to the borrower’s conduct, or the conduct of any of their associated persons if we consider such conduct warrants a statement

(ii) If, after offering a loan application but before the loan application is fully funded, the relevant borrower is identified as having breached the Act, ChangeFund will:

(a) Remove the loan application from the platform and notify the borrower and any affected Investors

(b) Suspend or cancel any or all of our services to the borrower

(c) Retain a copy of the loan application

(d) Publish statement relating to the borrower’s conduct, or the conduct of any of their associated persons if we consider such conduct warrants a statement

(iii) If, after a loan application has been fully funded, but has not been drawn down by the borrower, the relevant borrower is identified as having breached the Act; ChangeFund will:

  1. Terminate the loan drawdown process, remove the loan application from the platform and notify the borrower and any affected investors

(b) Suspend or cancel any or all of our services to the borrower

(c) Retain a copy of the loan application

(d) Publish a statement relating to the borrower’s conduct, or the conduct of any of their associated persons if we consider such conduct warrants a statement

(iv) If, after a loan has been drawn down by the borrower, the relevant borrower is identified as having breached the Act; ChangeFund will:

(a) Review the loan and seek external legal advice

(b) Upon receiving the external legal advice, consider the same and take the required action

(c) Notify the borrower and any affected investors

(d) Suspend or cancel any or all of our services to the borrower

(e) Retain a copy of the loan application

(f) Publish a statement relating to the borrower’s conduct, or the conduct of any of their associated persons if we consider such conduct warrants a statement

(g) Notify the breach to the FMA

 

 

  • Investors

 

(i) If an investor is identified as having breached the Act, ChangeFund will:

(a) Notify the investor and any affected borrower/s

(b) Suspend or cancel the investor’s access to and use of the platform

(c) Retain all information regarding that investor

(d) Publish a statement relating to the investor’s conduct, or the conduct of any of their associated persons if we consider such conduct warrants a statement

(e) If the relevant loan has been drawn down:

(i) Review the loan and seek external advice

(ii) Upon receiving the external legal advice, consider the same and take the

      required action

(iii) Notify the breach to the FMA

 

 

  • Advertising

 

Excerpt from the FMA’s Guidelines on Fair Dealing

“Advertisement” – In relation to an offer, or intended offer, it is any form of communication made to the public for the purpose of promoting that offer

The law states that it is an offence to engage in misleading or deceptive conduct in relation to financial products or to make false, misleading or unsubstantiated representations about financial products.

Also, whether a communication is an advertisement or not, we are governed by specific statutory requirements to comply with sections 89-92 of the FMC Act. Advertisements fall within the definition of “restricted communications”. Restricted communications are authorised or instigated by or on behalf of the offeror, issuer, service provider or an associated person and either refer to an offer/intended offer or are reasonably likely to induce persons to invest.

Advertising Standards Authority (ASA)

Under the Advertising Standards Authority – Code for Financial Advertising, ChangeFund will ensure all advertising complies with the ASA codes as well as the fair dealing sections of the FCM Act 2013.  All material will be reviewed by financial legal consultants in conjunction with ChangeFund management.

Guidelines from the ASA

  • Advertisements shall be set out in a way that allows them to be readily understood by the audience being addressed. All relevant information should be disclosed.
  • Advertisements shall not portray unrealistic or exaggerated financial expectations or outcomes.
  • Advertisements shall not state or imply that investments are safe or free from risk.
  • If examples of past performance are used, financial advertisements should make clear this does not necessarily give a guide for the future. Examples used should not be unrepresentative unless clearly identified as such.
  • Advertisements shall be accurate and statements and claims able to be substantiated.
  • Key information shall be legible and / or audible with care taken to ensure disclosure commensurate with the importance of the information.
  • Advertisements shall not claim or imply endorsement by any government agency, professional body or independent agency unless there is prior consent and the claim and endorsement are current and verifiable.
  • Technical language and statistics are acceptable provided they are relevant and used in a way readily understood by consumers without specialist knowledge. Publication of research results must identify the researcher and source references.

 

FMC Act – Schedule 1 – Provisions relating to when disclosure is required and exclusions for offers and services –

Part 1 Disclosure exclusions for offers of financial products for issue or sale

6. Offers of financial products through licensed intermediaries

 

  1. An offer of financial products to a person (A) does not require disclosure under Part 3 of this Act if –
    1. the offer is by or through a licensed intermediary in the course of supplying prescribed intermediary services to (A); and
    2. the prescribed intermediary services supplied to A by the licensed intermediary in relation to the offer are covered by the market services licence held by the licensed intermediary

 

 

  • Staff Competency and Training

 

 

We will ensure that that all ChangeFund staff have the knowledge and skills to provide quality advice by:

  • undergoing a structured training programme covering the advertising and promotion process, regulatory requirements, market developments, and other relevant topics.
  • being fully trained on the features and risk-reward characteristics of any investment product distributed by ChangeFund, and on the profile of the target customer segments of the product
Receive continuous professional training:

  • Responsible managers are required to do 20 hours per year of Continuous Professional Development training (cpd)  to stay abreast of complex regulatory requirements. This is to be done through Kaplan Professional via its online platform “Ontrack”
  • Continued training through attending credit industry events and networking events in New Zealand to facilitate peer-to-peer exchanges
  • Continued consultation with legal and financial experts to develop and implement structured training programs
Managers will conduct quality coaching sessions for their staff. We will ensure that “fact-find” form and risk profiling questionnaire adequately and correctly capture all important information
We will make clear the scope of financial advisory services we provide. Where no advice is provided on any investment product by us, we will highlight in writing that we are not providing advice, and what the implications are We will train our staff to undertake a proper “fact-find” and risk profiling analysis. We will ensure that staff:

  • make reasonable enquiries and collect sufficient information to understand and analyse risk tolerance, financial situation, personal circumstances, investment experience, investment priorities and ability to bear potential losses arising from the proposed investment.
  • present sufficient investment options, and provide advice that suits financial objectives, risk tolerance and personal circumstances.
  • strongly encourage investors to opt for a full “fact-find”, if they have limited knowledge of investment products so that the staff can conduct meaningful needs analysis.
We will not unduly influence customers or clients by offering gifts or rebates. We will also ensure that staff do not use aggressive sales tactics. We will ensure that regular compliance checks and other reviews of the product promotion process are performed by an auditor.

 

 

  • Information – Transparency

 

    • In developing marketing and disclosure documents, we will ensure that information presented in the documents is consistent with the information from our website and from staff. We will present key information clearly and in a simple format.

 

  • Where information is explained verbally by staff, we will ensure that any representations are consistent with the written information provided in the disclosure documents.
  • When dealing with investors who have limited knowledge or understanding, we will put in place additional safeguards during the onboarding process, including:
  • If the investor is non-English speaking, request they seek independent advice
  • We will provide product disclosure documents, including the disclosure statement, fee schedule, factsheets and marketing materials, before the investor makes a financial decision.
  • We will present the information in a fair and balanced manner, highlighting all key risks of the product, the potential return on investment, fees and charges, important terms and conditions, and rights and obligations. Information on the cooling off period, where applicable, will be highlighted.
  • We will ensure that all marketing and advertising materials, give a fair and balanced representation of the features and risk-reward characteristics of the products. We will be mindful that such advertising and marketing materials

 

    • do not misrepresent or omit key product features and risks
    • do not contain words or graphics that could convey an impression that is inaccurate or inconsistent with the nature or risks of the products
    • do not give the impression that you can make a profit without bearing any risk
    • do not mislead you about the possible performance of the products

 

  • Where there is a risk of losing a portion of or the entire principal amount in return for higher interest, this risk will be highlighted.
  • We will provide information and updates about investments, both during the onboarding process and after the loan has been drawn down.

 

 

  1. Complaints Handling

 

 

Please click here to download our Fair Dealing Policy.

Please feel free to contact us on [email protected] for further information.