Sales incentives and other regulations under the new conduct regime
This page provides information about the regulations relating to sales incentives and other matters that will apply after the Financial Markets (Conduct of Institutions) Amendment Act 2022 comes into force on 31 March 2025.
In June 2023, the Financial Markets Conduct (Conduct of Institutions) Amendment Regulations 2023 were made. These regulations give effect to previous Cabinet decisions in relation to several matters, including to introduce regulations relating to sales incentives based on volume or value targets.
Financial Markets Conduct (Conduct of Institutions) Amendment Regulations 2023(external link) — New Zealand Legislation
Under these regulations, financial institutions and intermediaries will be prohibited from offering sales incentives based on volume or value targets to their employees who are customer-facing and their immediate managers, and to their agents and intermediaries.
The regulations covering sales incentives are clause 6 (which adds regulations 237D to 237H to the Financial Markets Conduct Regulations 2014) and Schedule 1 (which adds new part 9 to Schedule 1 of the Financial Markets Conduct Regulations 2014).
Other minor matters covered by these regulations include:
- ensuring the regime works for the unique structure of the Lloyd’s insurance market, to ensure that consumers buying insurance policies from Lloyd’s can expect the same level of fair treatment as they would from conventional insurers
- calling in contracts of insurance as financial products under the ‘fair dealing’ provisions in Part 2 of the Financial Markets Conduct Act 2013
- excluding services offered to controlled entities of wholesale clients from the conduct regime, given that these entities do not require its protections.
Exposure draft consultation
An exposure draft of the regulations was released in September 2022. A number of changes were made in the June 2023 final regulations in response to feedback received on the exposure draft. These changes aim to improve the clarity and workability of the regulations.More details, including all the relevant documents, are available at:
Earlier Cabinet decisions relating to sales incentives
In September 2019, Cabinet agreed to regulate sales incentives based on volume or value targets. It was agreed that this regulation would apply to banks, insurers, non-bank deposit takers (together, financial institutions) and the intermediaries of these financial institutions.
Cabinet agreed in February 2022 that financial institutions and intermediaries be prohibited from offering sales incentives based on volume or value targets to their employees (except senior managers and executives), agents and intermediaries.
Other relevant documents, including Cabinet papers, can be found at: