Conduct of financial institutions review

The Government is introducing a new regulatory regime to govern conduct in the financial sector.

In late 2018 and early 2019 the Financial Markets Authority and the Reserve Bank of New Zealand published 2 joint reviews into the conduct and culture of banks and life insurers in New Zealand.

These reviews identified a number of issues with bank and insurer conduct, and gaps in how we regulate them.

New financial conduct regime

On 11 December 2019, the Government introduced new legislation regulating the conduct of financial institutions.

The Financial Markets (Conduct of Institutions) Amendment Bill 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.
  • 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.

Discussion documents: submissions open

The Ministry of Business, Innovation and Employment (MBIE) has released 2 discussion documents relating to the Financial Markets (Conduct of Institutions) Amendment Bill. The first relates to the treatment of intermediaries under the Bill, and the second covers the development of regulations to support the Bill. They are titled:

  1. Treatment of intermediaries under the new regime for the conduct of financial institutions
  2. Regulations to support the new regime for the conduct of financial institutions

MBIE welcomes all feedback in response to the discussion documents. To read the discussion documents, and send a response, head to the following Have your say pages:

Conduct of financial institutions treatment of intermediaries 

Conduct of financial institutions regulations

Submissions are open and will close on Friday 18 June at 5pm.

Next steps

The Bill is now awaiting its second reading. Then it will go through Committee of the whole House and third reading stages before being passed.

The feedback we receive from the consultation document titled Treatment of intermediaries under the new regime for the conduct of financial institutions will be used to advise the Government whether amendments should be made to the Bill via Supplementary Order Paper at Committee of the whole House stage later in 2021.

The feedback we receive from the consultation document titled Regulations to support the new regime for the conduct of financial institutions will be used to advise the Government later in 2021 on what regulations are necessary to support the new conduct regime.

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 financialconduct@mbie.govt.nz.

Related documents and information

Review of insurance contract law

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

Last updated: 20 April 2021 Last reviewed: 07 August 2020