Page last updated: 11 November 2022

Conduct of Financial Institutions (CoFI) legislation

The Financial Markets (Conduct of Institutions) Amendment Act 2022 amends the Financial Markets Conduct Act 2013 to ensure financial institutions treat consumers fairly. It is designed to protect consumers by putting the consumer at the forefront of institutions’ decisions and actions.

Also known as the Conduct of Financial Institutions (CoFI) legislation, it introduces a new regulatory regime to ensure registered banks, licensed insurers and licensed non-bank deposit takers comply with the fair conduct principle when providing relevant services to consumers. It is important that consumers get the financial products and services they need throughout their life, when they need it, and have trust and confidence it will do what it should.

CoFI significantly expands the FMA’s mandate as a conduct regulator to include financial institutions, and confers new responsibilities in terms of licensing, monitoring and enforcement.

Insurance advice

The CoFI legislation amends the Financial Markets Conduct Act 2013 by requiring registered banks, licenced insurers and licenced non-bank deposit takers to:

  1. be licensed by the FMA in respect of their conduct towards consumers; and
  2. comply with a “fair conduct principle” to treat consumers fairly, through the requirement for financial institutions to establish, maintain and implement a “fair conduct programme” (FCP) and take all reasonable steps to comply with the programme; and
  3. comply with regulations that ban target-based sales incentives, and regulate other types of incentives.

The “fair conduct principle” will apply whenever a financial institution:

  • designs services and products for consumers
  • offers to provide those services and products
  • provides those services and products
  • has any dealings or interactions with a consumer in relation to its services or products, eg responding to a complaint or handling a claim

The FMA and Reserve Bank of New Zealand undertook joint reviews into the conduct and culture of banks and life insurers in New Zealand, in 2018 and 2019, respectively. More recently, the FMA also reviewed the conduct and culture of fire and general insurers. Those reviews found banks and insurers were not putting in place systems and processes to ensure consumers were treated fairly.

The outcomes sought included:

  • Consumers getting products and services that suit them and address their financial needs.
  • Consumers being supported to make sound financial decisions, at the time of purchase and throughout the lifecycle of the product/services.
  • Consumers having trust and confidence in the NZ financial sector.
  • Financial institutions having the consumer at the heart of their business operations.

In December 2019, the Government introduced the Financial Markets (Conduct of Institutions) Amendment Bill, to amend the Financial Markets Conduct Act 2013. This was considered by a select committee in August 2020, and in June 2022 had its third reading and received Royal assent.

The CoFI Act has introduced some key terms to describe the framework for regulating the conduct of financial institutions in New Zealand. Read through the list of most common terms and their explanation.

Read the key terms under the CoFI Act 

Financial institutions need to treat consumers fairly, including by:

  • paying due regard to their interests
  • acting ethically, transparently and in good faith
  • assisting consumers to make informed decisions
  • ensuring the services and products that the financial institution provides are likely to meet the requirements and objectives of likely consumers
  • not subjecting consumers to unfair pressure or tactics or undue influence.

This image is a flowchart that helps users know whether they need a financial institution licence.  It asks: Are you a registered bank, licensed insurer, or licensed non-bank deposit taker?  If not, you won’t need to hold, or operate under, a financial institution licence.  If you are, and you’re also in the business of providing one or more relevant services, you will need to hold, or operate under, a financial institution licence.

Territorial scope
The CoFI Act applies to a financial institution’s provision of relevant services or associated products to consumers in New Zealand, so the service or product must be received by a consumer in New Zealand.

This means a financial institution that is in New Zealand but only provides relevant services or associated products to consumers outside New Zealand will not need to hold or operate under a financial institution licence.


  • Late-2022/early-2023: we will release
    • a licence application guide, with information about how to make an application and interpret the questions
    • a Fair Conduct Programme information sheet to help applicants prepare for licensing by establishing their FCP
    • the standard conditions for financial institution licences
  • Early-2023: we will publish draft intermediated distribution guidance for consultation
  • July 2023: financial institution licence applications expected to begin, ~18 months prior to regime commencement
  • Early-2025: financial institution licences come into effect

Nature of application form

  • A single online application form for all applicants, aimed at understanding the applicant’s business
  • Applicants will need to have an established fair conduct programme (FCP) before applying. While we do not expect these to be fully implemented by at the time of applying, we do expect the FCP to have been approved by the applicant’s board of directors.

Further information can be found on the Ministry of Business Innovation and Employment website.



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