FMA insights on related party disclosures by MIS managers

On 6 August 2026, the Financial Markets Authority – Te Mana Tātai Hokohoko (FMA) released a report on related party disclosures in financial statements by managed investment scheme (MIS) managers and underlying schemes. This is separate from the FMA’s recent draft insights paper about related party transactions, which is currently being finalised.

The FMA reviewed the 2025 financial statements of 61 MIS managers and selected schemes to assess whether investors and other users were being provided with sufficient, clear and useful information about related party relationships and transactions. The report examines whether related parties had been appropriately identified and disclosed in accordance with the objectives and requirements of NZ IAS 24 Related Party Disclosures, and whether users could adequately assess the effect of those relationships on an entity’s financial position, performance and risk profile.

Control testing – that is, assurance about the completeness and accuracy of the identification of related parties – was outside the scope of the report.

The report follows the FMA’s 2025/26 Financial Conduct Report (FCR), which identified disclosure of related party transactions in financial statements as an area of regulatory focus. You can read our insight on the FCR here.

The report is intended for MIS sector stakeholders, including MIS managers, scheme governing bodies, directors, audit committees, auditors and users of financial statements.

 

Key observations

While most MIS managers identified and disclosed related party relationships and transactions, the FMA identified shortcomings across four key areas:

• Disclosure of related party relationships: while most MIS managers and schemes identified and disclosed expected related party relationships and transactions, disclosures were often generic and lacked sufficient detail. Many failed to explain the nature of the relationship, how the relationship gave rise to the transactions disclosed, and the effect of those relationships on transactions, balances and fees.
• Disclosure of management fees: management fee disclosures were often incomplete or lacked sufficient detail, making it difficult for users to understand how MIS managers generate revenue and how related party transactions affect an entity’s financial performance and position. The quality of these disclosures was considerably higher in scheme financial statements, with approximately 44 assessed as adequately disclosed compared with 23 manager financial statements.
• Disclosure of investment structures: while investments through related party managed funds were commonly disclosed, disclosures often did not provide sufficient information about the nature of those exposures, the underlying sources of risk, or potential conflicts of interest. In many cases, disclosures also failed to adequately explain the basis on which investments had been valued. Despite around 75% of schemes investing in other schemes managed by the same fund manager, disclosures frequently lacked sufficient detail about those investments and their valuation.
• Disclosure of valuation techniques: disclosures often lacked sufficient detail about how fair value had been determined or why a particular fair value hierarchy classification, being Level 1, 2 or 3, had been adopted. In many cases, entities assumed that net asset value equated to fair value without explaining the judgements involved or whether any adjustments were considered. Level 2 fair value hierarchy classifications were frequently applied without sufficient disclosure of the valuation methods, inputs and assumptions supporting that classification.

 

What is 'good disclosure'?

The FMA expects related party disclosures to be clear, complete and entity-specific, enabling users to understand the nature and effect of related party relationships and transactions.

Disclosures should be:

• Specific: clearly identify related parties and explain the nature and substance of those relationships, rather than relying on generic descriptions that provide little insight into their economic effect.
• Transparent: fully explain management fee arrangements, investment structures and the full investment chain, including how investments are valued and any fee bases, rates, ranges, rebates or offset mechanisms that apply.
• Robust: clearly explain fair value methodologies and fair value hierarchy judgements, including key assumptions, valuation inputs and any adjustments considered in determining fair value.

 

Our view

This report provides a clear indication of the areas where the FMA considers current disclosure practices to be falling short. To assist MIS managers, the FMA has included practical examples of what it considers to be good disclosure practices, demonstrating how entities can move beyond boilerplate disclosures and provide more useful information to investors.

The report continues the FMA’s stated regulatory priorities and broader focus on improving transparency, governance and investor outcomes across New Zealand’s financial services sector.

DLA Piper will continue to monitor developments in this space and report on further FMA updates.