The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has released an information sheet aimed at helping smaller firms set up and maintain a Fair Conduct Programme (FCP) and apply for a Financial Institution (CoFI) licence.
The document provides guidance and examples to aid smaller firms in developing, implementing, and sustaining their FCPs.
Under the Financial Markets (Conduct of Institutions) Amendment Act 2022, financial institutions must have an FCP designed to ensure they adhere to the fair conduct principle.
This principle requires financial institutions to treat consumers fairly. The CoFI regime is intended to protect consumers by ensuring they are a priority in the decision-making processes of financial institutions. This principles-based approach allows institutions to tailor their processes and controls to ensure fair treatment of consumers.
The information sheet is part of the FMA’s ongoing efforts to help smaller firms prepare for the new regime, set to begin in March 2025.
To help firms understand their obligations under the new legislation, the FMA has conducted multiple market engagements, including two webinars attended by approximately 150 participants. Feedback from 40 firms has guided the regulator’s support strategies. Additionally, FMA staff have conducted 11 one-on-one sessions with smaller firms, with 20 more firms expressing interest in such sessions. The FMA will continue to support firms throughout the application process.
FMA executive director of regulatory delivery Clare Bolingford noted that smaller firms are expected to need less complex FCP compared to bigger financial institutions.
“We have some great examples of working with a diverse range and size of businesses from the financial advice sector while we implemented the new advice regime. CoFI is also principles-based and therefore, we won’t be taking a ‘one size fits all’ approach to the way that firms meet the minimum requirements. Each firm’s Fair Conduct Programme needs to be proportionate to the nature, size and complexity of its business,” she said. “We expect smaller firms will need a less complex FCP compared to bigger financial institutions. We also expect firms to review and evolve their FCPs over time. FCPs do not need to be fully implemented until the regime comes into force.”
She urged smaller firms to read the information sheet and attend the FMA’s CoFI workshops.
“The FMA is here to support firms on their journey. It is also a timely reminder for all firms to get their licence applications in well in advance of the March 2025 deadline for obtaining a licence,” she said.
The FMA recently announced a new standard condition for market licence holders, set to take effect from July 1, aimed at bolstering business continuity and technological resilience.
