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.
In July 2022 we commenced consultation on the proposed standard conditions for financial institution licences. Submissions close 7 September 2022.
The CoFI legislation amends the Financial Markets Conduct Act 2013 by requiring registered banks, licenced insurers and licenced non-bank deposit takers to:
The “fair conduct principle” will apply whenever a financial institution:
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:
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.
Financial institutions need to treat consumers fairly, including by:
Nature of application form
Further information can be found on the Ministry of Business Innovation and Employment website.