Page last updated: 30 November 2022

Financial Institution licensing

What is a financial institution licence? 

The CoFI Act creates a new market service of “acting as a financial institution." We refer to this market service as the “financial institution service”. The licence for this new market service will be known as a “financial institution licence”. 

Who needs a licence?

From the start of the new CoFI regime, any registered bank, licenced non-bank deposit taker in the business of providing one or more relevant services will need to hold a financial institution licence to continue operating, if that service is 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. 

The following diagram is a useful tool you can use to determine whether you require a financial institution licence   

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.

 

How to prepare for the CoFI licensing regime

Key dates

Early-2023

  • we will publish draft intermediated distribution guidance for consultation
  • MBIE is expected to confirm the date that the new regime will come into force and the fees that will be charged for licence applications

25 July 2023:

  • financial institution licence applications open for submission.

Early-2025:

  • the new regime will come into force. All existing banks, insurers and non-bank deposit takers will be required to have a financial institution licence when the new regime comes into effect

How to apply for a licence

Licence applications must be made online via the FMA website. Before applying for a financial institution licence, you must be registered on the Financial Service Provider Register (FSPR), and you will need a RealMe login to use our online application form. Further information may be found in our licensing guide.

Download the financial institutions licensing guide for more information.

What to expect from the licence 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.

Licensing costs 

The application fee for a financial institution licence has not yet been set by MBIE. When the fees have been determined, these will be published on our website. All amounts will include GST. 

Standard conditions

All financial institutions and their authorised bodies need to comply with standard conditions. These conditions relate to the following:

  1. Ongoing requirements 
  2. Notification of material changes 
  3. Regulatory returns 
  4. Outsourcing 
  5. Business continuity and technology systems 
  6. Record keeping 

View the consultation page about standard conditions for financial institution licences for background and all related financial institutions standard conditions consultation documents.  

Technical terms introduced by the CoFI regime

The Financial Market (Conduct of Institutions) Amendment Act has introduced some technical terms to describe how the CoFI regime operates. Some of those new terms are referred to in the licensing guide, the FCP information sheet and the standard conditions. Read through the list of most common terms and their explanation.

 

CoFI licensing FAQs

If you are a prudentially registered bank, licensed insurer, or licensed non-bank deposit taker, and in the business of providing one or more relevant services to consumers in New Zealand, you will need a financial institution licence to continue providing these services from the date the CoFI regime comes into force (expected to be early 2025). Refer to the diagram on our CoFI page for further guidance on who needs a financial institution licence.

New Zealand’s financial markets are regulated under a “twin peaks” model. This means that two regulators – the FMA and the Reserve Bank – both have shared responsibility for regulating financial institutions. However, each of these entities are tasked with separate functions. The FMA’s remit is primarily conduct regulation, while the Reserve Bank’s remit is prudential regulation. 

All entities which will be issued with a financial institution licence by the FMA under the CoFI Act are also separately prudentially licensed and regulated by the Reserve Bank. Due to the different remits of the two regulators, the FMA cannot rely on the conditions imposed on licences issued by the Reserve Bank in order to monitor our own licensed population. We will impose our own conditions on licences, to ensure licence holders continue to meet the licensing requirements under the FMC Act, and to help us effectively monitor the licensed population. 

Yes, an application for a financial institution licence can include authorised bodies. An authorised body is a related body corporate named on a licence that can provide the licensed service without needing its own licence. Both the licensee and any authorised bodies must (collectively) meet the eligibility criteria set out in section 400(1A) of the FMC Act. For more information refer to the financial institutions licensing guide. 

We will start accepting applications for financial institution licences from 25 July 2023. We will continue to accept applications for financial institution licences at any time, however existing banks, insurers and non-bank deposit takers will need to have their financial institution licence approved by the date the new regime commences in early 2025, in order to continue providing relevant services to consumers.

We strongly recommend that you submit your application early to ensure your licence is processed before the CoFI regime comes into force.

In early 2023, MBIE is expected to confirm the exact date the regime will commence.

If you want to make any changes to your application during the assessment process, before your licence is assessed or granted, please contact us.

A financial institution licence will have no expiry date unless the FMA specifies one, or you give notice to cancel your licence, or the FMA withdraws it. 

We will start accepting applications for financial institution licences from 25 July 2023. We currently aim to process licence applications within 60 working days of receipt.  However, this timeframe can vary depending on the nature of the application, as well as the volume and complexity of other applications being processed at the time.  

By submitting an application as early as possible, applicants will give themselves the best chance of ensuring their licence is processed before the CoFI regime comes into force in early 2025.

No, because a licence application is a point-in-time assessment of the applicant’s capability to provide a particular licensed service. The FAP licence application relates to the applicant’s capability to provide a financial advice provider service, which is different to a financial institution service. Therefore, we need to collect different information to assess the applicant’s capability to provide the financial institution service. 

We do, however, take into account the information we already hold about an applicant when we are assessing a new licence application (such as information submitted as part of a FAP licence application).

No, there are not separate classes or types of licences for each type of financial institution.   

If you haven’t been notified that your licence has been issued by the time the CoFI regime comes into force, you will not be allowed to provide relevant services to consumers.

If you have questions or concerns about the processing of your application, please contact us.

After receiving your application, we will send an email notification acknowledging receipt. Then, as we assess your application, we may contact you to clarify your application (or certain parts thereof) or to request further information.  

After processing your application, we will email you to confirm whether your licence has been approved or declined, or if it requires specific conditions.  

If your licence is approved, we will update the Financial Service Provider Register. 

Yes, there will be six standard conditions imposed on every financial institution licence issued by the FMA.  View the financial institution standard conditions document for more information.

We may impose additional conditions on an individual licence (known as “specific conditions”) on a case-by-case basis. You will be notified if any specific conditions have been imposed on your licence at the time we grant it. 

Conditions are necessary to ensure licence holders continue to meet licensing requirements, and to help us effectively monitor the licensed population.  

On 20 July 2022, we released a consultation paper seeking feedback on our proposal to impose six standard conditions on financial institution licences. We received written submissions from a range of stakeholders and, after carefully considering the submissions, decided to impose six standard conditions on each financial institution licence issued. For more information, see our response to the feedback we received and the Regulatory Impact Statement, which assesses the impacts of the standard conditions.

View the consultation response feedback

View the financial institutions standard conditions document

View the financial institutions Regulatory Impact Statement (RIS)

The FMA plans to continue engaging with financial institutions on a range of topics around the CoFI regime, including licensing. Details will be communicated to the relevant financial institutions closer to the time of each engagement.