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.


In April to June 2021, the Ministry of Business, Innovation and Employment (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. You can find these 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)

Next steps

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

The feedback received from consultation will be used to advise the Government whether amendments should be made to the Bill via Supplementary Order Paper, or whether regulations are necessary to support the new regime.

Change in control provisions

Once the Bill is passed, 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 are therefore not being pursued at this time 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.

Last updated: 22 April 2022 Last reviewed: 11 October 2021