Conduct of financial institutions regime

The Government has introduced a new regulatory regime to govern conduct in the financial sector.

New financial conduct regime

The Financial Markets (Conduct of Institutions) Amendment Bill had its third reading on 28 June 2022. The legislation introduces a new regime regulating the conduct of financial institutions that is planned to come into force in early 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, eg soft commissions such as overseas trips, bonuses for selling a certain number of financial products, or leader boards.

Next steps

The FMA will now work with financial institutions to ensure they are prepared for the new regime, and licensing applications are expected to open in mid-2023. The Ministry of Business, Innovation and Employment (MBIE) will also develop supporting regulations.

The regime will come into force on a date specified by Order in Council. At this stage it is planned that the regime will come into force in early 2025, after a transitional period.


In April to June 2021, MBIE consulted on 2 discussion documents relating to the Financial Markets (Conduct of Institutions) Amendment Bill. The first asked for feedback in regards to the treatment of intermediaries under the Bill, and the second covered the development of regulations to support the Bill.

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

You can find these discussion documents here:

Conduct of financial institutions treatment of intermediaries 

Conduct of financial institutions regulations

Read the submissions from the consultation on the discussion document(external link)

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 Bill 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 Bill. They were therefore not pursued through this legislation although may be considered as part of future work programmes.

Feedback welcome

We welcome feedback at any time about our work on the conduct of financial institutions. If you would like to contact us, please 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: 29 June 2022