The Financial Markets (Conduct of Institutions) Amendment Act 2022 (otherwise known as the CoFI Regime) comes fully into force today, 31 March 2025. This regime marks a significant milestone in the conduct regulation of financial institutions under New Zealand financial services law.
For full details on the background of the CoFI Regime please see our previous article: Conduct of financial institutions regime. In summary, under the CoFI Regime all registered banks, licensed insurers and licensed non-bank deposit takers who are in the business of providing one or more relevant services (generally speaking, financial services to retail clients/consumers) are required to be licensed as a financial institution.
In addition to being licensed, the obligations of financial institutions under the CoFI Regime include:
- Comply with the "fair conduct principle" in designing, offering and providing products and services to consumers – including any subsequent dealings or interactions
- Establish, implement and maintain a fair conduct programme which meets certain minimum requirements
- Comply with the incentives regime – which prohibits certain incentives which are determined or calculated in reference to the volume or value of products and services. Intermediaries, such as brokers and advisers, must also comply with this regime.
The Financial Markets Authority (FMA), the regulator of the CoFI Regime, has made it clear that it intends to be an active regulator in this space, focusing on ensuring positive outcomes for the sector and consumers. The FMA intends to continue to produce guidance, host engagement meetings and publish various reviews in relation to the CoFI Regime to ensure the regime is working as intended.
If you would like to discuss any aspect of the CoFI Regime or how your business can remain informed of market practice developments and regulator activity in relation to these new requirements, please get in touch with our financial services regulation team.
