The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has revised its regulatory approach to focus on consumer and market outcomes, following a public consultation that included feedback from financial service providers, legal professionals, and consumer advocacy groups.
The update comes as the FMA’s first Consumer Confidence Survey highlighted declining trust in financial markets. While most consumers believe financial service providers act fairly, overall confidence in the financial sector has fallen over the past year.
The Consumer Confidence Survey found that 75% of respondents believe financial service providers treat customers fairly, with banks and KiwiSaver providers receiving higher trust ratings than insurers. However, confidence in financial markets declined from 68% in 2023 to 57% in 2024.
The survey also found that confidence levels varied based on financial stability and engagement. Respondents who were financially secure and actively managed their finances reported greater trust in markets. Lower confidence was recorded among women, Māori, Pacific peoples, and those from lower-income groups.
The FMA has updated its outcomes-focused regulatory approach, which was initially introduced in November 2023. The framework is designed to align regulatory efforts with intended results for consumers, businesses, and financial markets.
After reviewing over 50 submissions from industry stakeholders, the FMA refined its regulatory objectives to provide greater clarity and flexibility for financial service providers.
Executive director of regulatory delivery Clare Bolingford said the changes reflect key industry concerns while maintaining the FMA’s commitment to fair and transparent markets.
“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 FMA outlined six regulatory outcomes that will guide its approach:
To improve transparency, the FMA will introduce an Annual Financial Conduct Report, outlining regulatory priorities, market risks, and findings from supervisory activities. The report aims to provide industry participants with insights into key trends and areas requiring attention.
In 2025, the FMA will also implement a revised supervisory model that will:
The FMA said firms will retain flexibility in determining how they meet regulatory requirements but warned that enforcement action will be taken if poor practices lead to negative consumer outcomes.
The FMA stated that it will continue using a range of enforcement tools, from informal feedback and administrative actions to civil and criminal proceedings. The regulator will focus on conduct that threatens consumer confidence or market stability.
A key area of focus will be financial services operating outside traditional licensing requirements, such as wholesale financial products, custody services, and crypto-assets. The FMA said it will monitor these sectors closely and intervene where necessary.
The regulator will also use licensing and exemptions to balance market access with compliance obligations. Additionally, a regulatory sandbox will allow firms to test new financial products under controlled conditions, promoting innovation while managing risks.
