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As part of the custodial arrangement, FNZ Custodians Limited holds investors’ money as trustee of a bare trust. Only the beneficial owners of the monies have access (the investors). This access is through their adviser, who instructs the custodian via Consilium Wrap.

Investments are registered in the name of FNZ Custodians limited. For some international markets, investments are registered in the name of a sub-custodian contracted to FNZ.

Cash in the Cash Management Account (CMA) is held in a pooled account by ANZ Bank. A pooled account means that the cash of all investors is held in one central bank account and FNZ as administrator holds a registry of the investor breakdown. The cash of Consilium Wrap investors is also pooled with the cash of investors on other FNZ platforms.

Importantly, Consilium itself is not a custodian and does not provide custodial services as part of Consilium Wrap. That is something we leave to the specialist team at FNZ with its proven track record of keeping client money and property safe, leaving us to concentrate on what we do best - providing top flight support services for financial advisers and their clients.

All assets are held in trust on behalf of the beneficial owner by FNZ Custodians Limited and do not form part of FNZ's assets in the event of insolvency. FNZ and FNZ Custodians Limited are regulated by the FMA as a broker, and part of the requirements of the governing regulations are that FNZ must ensure that client assets and client money are appropriately separated from its own assets. This requirement is tested by regulatory visits, external audit (GS007) and internal monitoring performed by the Risk and Compliance team and internal audit function.

The contractual arrangements are as follows:

1. Investor has an agreement with adviser
2. Adviser has an agreement with Consilium
3. Consilium has an agreement with FNZ, under which FNZ agrees to provide custodial services for investors. 

The process for an investor is very simple:

An adviser sets up an investor account on wrap and provides proof of their bank account. This proof of bank account is checked by FNZ, and in some cases Consilium, to ensure it is in the investor’s name. The investor sends money to the custodian’s bank, ANZ, to be credited to an account in the name of FNZ Custodians Limited to hold on behalf of the investor, using their Consilium Wrap account number as a reference. This FNZ Custodians bank account is a registered payee with most major banks and a deposit slip is available on request. 

Once the funds arrive, the adviser, or in some cases Consilium, instructs the custodian to process trades on behalf of the investor. The custodian settles these transactions.

Withdrawals that are made are paid to the investor's nominated bank account, previously provided. Investors can have an online login to access to view their portfolio if they choose. This is managed via the adviser.

The custodian sends annual tax and biannual custody reports to the postal address or email address of the investor as entered into wrap by their adviser, or in some cases Consilium.  

When investors join Consilium Wrap they should receive custodian. The reports should not be sent anywhere else, although advisers will have access to a copy. The custodian report is a legally required statement of the investor's holdings, transactions, fees and income and is delivered in April and October each year.

The custodian report helps investors be certain that the records the custodian holds match those that are being reported by their adviser. Investors are also all entitled to 24/7 direct login to Consilium Wrap that gives them a live view of the custodial holdings FNZ is maintaining on their behalf.

Where an investor's adviser is unavailable, Consilium can also provide assistance to investors on the use of their login, including password maintenance. If an investor has concerns about their adviser, or the custodian reports they receive, or if they are not receiving custodian reports directly when they should, they can contact Consilium or the Financial Markets Authority.

FNZ have aligned their Information Security framework with the objectives outlined in ISO 270001:2006, the Information Security standard. They have aligned their IT controls to the ISO 270001:2013 Information Security standard an those controls are independently audited twice per year. The controls cover the following:

• Access controls and information handling
• Data centre physical security
• Vulnerability management and incident response
• Operations and network management
• Application security
• Internal audit 

Consilium adds another layer of due diligence in relation to the services provided by the custodian to help advisers and investors feel comfortable.

Consilium reviews all FNZ monthly KPI reporting, monthly assurance summaries and the 6 monthly audit reports compiled by PWC. Consilium annually reports back to advisers the outcome of these reviews and any areas of concerns. This review includes the following:

• Review of firm ownership 
• Review of insurance contracts and financial strength
• Review of audit reports
• Review of service quality
• Review of errors
• Review of technology and capacity.

As part of FNZ and FNZ Custodian’s responsibilities, they settle the transactions, collect dividends/distributions, process corporate actions and provide taxation and custody reporting.

FNZ is undergoes a GS007audit conducted by PWC and an AML/CFT audit conducted by AML Solutions. Several internal audits on operational controls/processes are also undertaken. Consilium Wrap is audited as part of FNZs audit processes.

Consilium also audits adviser businesses to ensure they are complying with their AML/CFT obligations. The Financial Markets Authority is the regulator of financial advisers in NZ and is responsible for enforcing compliance with the relevant law.

As a large financial institution which is systemically important in many markets in which they operate, FNZ carries out financial stress tests on all global operations - including as part of specific processes with regulatory agencies (FCA in the UK, for example). 

Consilium, as a licenced financial service provider (DIMS & MIS) is required to submit regular net tangible asset (NTA) calculations and report to the FMA. 

Of course, all investor assets are held in bare trust by FNZ Custodians Limited and as such are separate from Consilium financials. 

In the event that an adviser business or Consilium were to go into liquidation, investor funds are still in safe custody with FNZ Custodians Limited. The financial assets of Consilium are in no way intermingled with those of investors and Consilium does not, at any time, directly handle any investor monies or investments.

If Consilium were ever to fail a few things could happen:

• Wrap could be put up for sale to a new provider
• Portfolios could be transferred to another FNZ wrap provider or even another custodian
• Consilium failing would have no financial impact to the client as the assets are held in a bare trust

If FNZ were to fail there would likely be a period of illiquidity while a new administrator was appointed to receive instructions on behalf of investors but investor funds would remain in safe custody.

FNZ Custodians cannot fail as it does not have any liabilities, it is only a holder of investor assets.

If your adviser’s business were to fail, Consilium would temporarily be able to accept your instruction while putting you in contact with other advisers who use Consilium Wrap. Consilium does not provide financial advice or custodial services.

Neither Consilium, FNZ, FNZ Custodians Limited nor your adviser can guarantee the financial security of any of the investments you have selected. It is important that your adviser explains the risks of investing to you and what would happen in the unlikely even that an investment you selected was to go into liquidation.