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26 November 2025

Review of regulatory settings for custody of client assets

We are reviewing the regulatory framework for custody of client assets in New Zealand. In simple terms, custody is the responsibility for holding and safeguarding money or property on behalf of investors. We invite custodians, other financial service providers, investors and the public to engage with this review to help shape effective and practical proposals for reform.

Why are we reviewing custody rules?

  • Safekeeping of client money and property is fundamental to trust in financial services.
  • Recent growth and innovation in investment and payments have outpaced the existing custodial regulations made over 10 years ago.
  • In some important areas, New Zealand’s custody rules don’t match the standards set for custodians in similar overseas markets.
  • Stronger, fit-for-purpose custody rules are needed to protect against fraud and mismanagement, and to support confidence, growth, and innovation in our financial markets. 

Advocating for reform for assets held in custody is a regulatory priority for the FMA for the 2025/26 year:

See the 2025 Financial Conduct Report [1.5MB]

This also aligns with our statutory function to keep law and practices in our financial markets under review.

What will the review cover? 

Our review will consider all types of custody services in financial markets, including custody of client money and property, and scheme property, both retail and wholesale.

Key areas under consideration include:

  • Alignment with international standards 
  • Lessons from past misconduct cases (fraud, mismanagement) 
  • Whether current rules set adequate minimum entry requirements for custodians and allow for adequate oversight  
  • Operational resilience and cyber security settings 
  • Emerging issues such as custody of virtual assets and customer money held by payment service providers

Expected timetable 

Phase

Expected timing

How to participate

Publication

One

Q4 2025

Informal feedback

N/A

Two

Q1 2026

Public consultation

Discussion paper

Three

Q2 2026

Industry workshop[s]

Public report

Report

When our review is complete, we will publish a report with our findings and recommendations for law reform. The Ministry of Business, Innovation and Employment (MBIE) is the lead policy agency, and we will engage with them on any law changes we recommend.

How to contact us

We encourage custodians, financial service providers, investors and the public to participate throughout the review process. You can contact us at any time to ask questions or provide feedback at [email protected].