A new regulatory regime governing how insurers, banks, and deposit-taking institutions interact with customers has officially commenced, with the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – assuming expanded oversight responsibilities under the Conduct of Financial Institutions (CoFI) legislation.
Effective from March 31, the CoFI regime introduces statutory obligations requiring licensed financial institutions to establish and implement fair conduct programmes. These programmes are expected to support consistent fair treatment across all customer interactions – from product development through to claims and complaints processes.
The FMA confirmed it has issued 77 licences under the new framework, including to 46 insurers, 17 banks, and 14 non-bank deposit takers such as credit unions and finance companies.
Michael Hewes, director of deposit taking, insurance, and advice at the FMA, said institutions are now expected to embed conduct standards across their operations.
“CoFI is fundamentally about treating customers and potential customers fairly – this is the fair conduct principle. We expect financial institutions to be analysing how their products are performing, communicating effectively with consumers, and acting quickly if something is not working as it should be,” he said.
Each institution must also publicly disclose a summary of its conduct programme, enabling customers to understand how providers intend to meet their obligations.
The CoFI framework stems from a series of conduct and culture reviews jointly conducted by the FMA and the Reserve Bank of New Zealand between 2018 and 2020. These investigations led to the introduction of the Financial Markets (Conduct of Institutions) Amendment Act in 2022.
As a result of remediation efforts following those reviews, over $215 million has been repaid to more than 1.5 million customers.
Alongside the rollout of CoFI, the FMA has unveiled a revised regulatory approach designed to better align oversight with intended outcomes for consumers and market participants.
The update follows feedback from industry stakeholders and builds on an outcomes-focused model initially introduced in late 2023.
According to FMA executive director of regulatory delivery Clare Bolingford, the new framework offers greater operational flexibility while reinforcing the regulator’s focus on market integrity and customer outcomes.
“The approach focuses on the most significant risks and opportunities for New Zealand businesses, investors, and consumers; helps reduce unnecessary regulatory burden on the industry; and provides market participants with greater flexibility in meeting regulatory obligations,” she said.
The regulator has defined six key outcomes that will underpin its approach:
To support this approach, the FMA will publish an Annual Financial Conduct Report from 2025. This will outline supervisory priorities and emerging risks across the sector.
A new supervisory model will also be implemented, increasing engagement with boards and executives, and using both on-site and remote reviews to assess institutional conduct.
