Conduct of financial institutions regime

MBIE is responsible for administering legislation relating to conduct in New Zealand’s financial sector.

Financial conduct regime

The Financial Markets (Conduct of Institutions) Amendment Act 2022 was passed into law on 29 June 2022. The legislation introduces a new regime regulating the conduct of financial institutions that will come fully into force on 31 March 2025.

Once it comes into force, the new regime will:

  • Require banks, insurers and non-bank deposit takers (together, financial institutions) to be licensed in respect of their general conduct towards consumers. The licensing regime will be monitored and enforced by the Financial Markets Authority (FMA).
  • Require financial institutions to establish, implement and maintain effective fair conduct programmes throughout their businesses that ensure they meet the requirement to treat consumers fairly.
  • Require financial institutions to comply with their fair conduct programme.
  • Require financial institutions and intermediaries involved in the chain of distribution to comply with regulations that regulate incentives. These regulations will be able to prohibit sales incentives based on volume or value targets, e.g. soft commissions such as overseas trips, bonuses for selling a certain number of financial products, or leader boards.

Read the Act

Visit the New Zealand Legislation website to read the Act

Financial Markets (Conduct of Institutions) Amendment Act 2022(external link) – New Zealand Legislation

Visit the New Zealand Parliament website to view the history of the Act

Financial Markets (Conduct of Institutions) Amendment Bill(external link) – New Zealand Parliament

Supporting regulations

In June 2023, regulations were made to support the new regime. These include regulations prohibiting financial institutions and their intermediaries from offering sales incentives based on volume or value targets, regulations setting the licensing fee for financial institutions, and other details.

More details about these regulations, and consultation carried out on them, are available at the following pages:

Sales incentives and other regulations under the new conduct regime

Financial institution licensing fees under the new conduct regime

Next steps

The FMA is working with financial institutions to ensure they are prepared for the new regime, with licensing applications opening on 25 July 2023.

The regime will come into force on 31 March 2025. 


2022 consultation on regulations

In October and November 2022, MBIE sought additional feedback on the supporting regulations for this new regime and the proposed fees, through 2 consultations. You can find more information about these consultations at:

Sales incentives and other regulations under the new conduct regime

Financial institution licensing fees under the new conduct regime

2021 consultation on discussion documents

In April to June 2021, MBIE consulted on 2 discussion documents relating to the regime. The first asked for feedback regarding the treatment of intermediaries, and the second covered the development of regulations to support the regime.

The feedback received from consultation was used to advise the Government on amendments made to the Bill via Supplementary Order Paper, and regulations that were made to support the new regime.

You can find these discussion documents here:

Conduct of financial institutions treatment of intermediaries 

Conduct of financial institutions regulations

Change in control provisions

Once the new regime comes into force, financial institutions will need to hold both a conduct and prudential licence to operate in New Zealand. Provisions within prudential legislation, administered by the Reserve Bank, require a licensed financial institution to obtain regulatory consent from the Reserve Bank prior to any change in control (ownership) of the institution (and, in the case of licensed insurers, a transfer, amalgamation or change in corporate form).

The Act does not contain similar provisions requiring financial institutions to obtain a regulatory consent from the FMA from a conduct perspective ahead of any change in control. In its report on a petition by Mr Andrew Body, the Finance and Expenditure Committee recommended that the Government consider amending the Bill to include a conduct assessment at the point of sale.

Petition of Andrew Body: Protection of the interests of AMP Life's policyholders(external link)  — New Zealand Parliament

Although the Government does see potential merit in this option, change in control provisions would require further consultation, policy work and time to develop and are not core to the new conduct regime. They were therefore not pursued through this legislation although they may be considered as part of future work programmes.

Feedback or questions welcome

We welcome feedback or questions at any time about our work on the conduct of financial institutions. If you would like to contact us, you can email:

Related documents and information

Review of insurance contract law

You may also be interested in the insurance contract law review which is currently underway:

Insurance contract law review

Last updated: 18 July 2023