In late June, the Financial Markets Authority (FMA) unveiled its inaugural Financial Conduct Report (FCR), framing a clear regulatory agenda for the year ahead. The report strikes a balance between protecting consumers and enforcing fair conduct, while also enabling market innovation and expanding access to financial services.

Anchoring fair conduct

The FMA’s top-line message aligns with its outcomes-based regulatory approach - not simply punishing misconduct, but fostering markets where firms naturally pursue fair consumer outcomes.

Priorities by sector:

The FMA sets out the following key priorities by sector:

• Financial advice: Monitoring how fees, commissions, and incentives are disclosed. Special focus on advice targeting vulnerable consumers, ensuring suitability and transparency.
• Banks & Deposit Takers: With the new CoFI regime effective from 31 March 2025, the FMA expects firms to conduct proactive product reviews, spot misaligned offerings, and take swift remedial action.
• Insurers: Equally, insurers must reassess legacy products, improve staff awareness, and enhance communication under the updated Contracts of Insurance Act - all aimed at transparent, fair customer engagement.
• Capital Markets & MIS: A continued focus on ethical claims and a sharpened focus on ensuring wholesale disclosure isn’t misleading, including legal actions to clarify "wholesale investor" standards.    

Cross-sector, the FMA will also:

• Enhance complaint-awareness and resolution processes.
• Intensify efforts to disrupt scams through industry partnerships.
• Advocate for better protections of assets held in custody.

Enabling innovation and access

The FMA acknowledges that overly rigid regulation can unintentionally hamper growth or encourage avoidance, and it will work with the Ministry of Business, Innovation and Employment on advancing capital markets policy changes.

It also has the following key innovation measures:

• Regulatory Sandbox: Expanding support for the sandbox initiative, allowing fintechs to pilot new products under regulatory oversight.
• Single Conduct Licence: Simplifying licensing by replacing multiple activity-based licences with a single, streamlined conduct licence to reduce duplication and lower barriers to entry.
• Clearing ‘Regulatory Perimeter’: Investigating tokenised/virtual asset services, seeking to bring them into the regulatory framework where needed, without stifling innovation.
• Operational Resilience: Working with the Reserve Bank of New Zealand to boost firms’ ability to withstand system shocks and reduce compliance inefficiencies in critical infrastructure.

Striking the right balance

In essence, the FMA is striking a balance:

• To protect consumers, especially the vulnerable, it is expanding scrutiny in areas like disclosures, legacy product quality, and complaint-handling.
• To support innovation and access, it is looking to ease regulatory friction where possible: testing sandboxes, simplifying licensing, and clarifying when emerging asset classes fall under oversight.

What this means for firms and consumers

Businesses should read the FCR and:

1. Reassess product suites, especially older offerings.
2. Strengthen disclosure and complaint-handling processes.
3. Test new innovation within the sandbox or under the single licence framework.
4. Engage early with the FMA on emerging virtual asset initiatives.

Consumers can expect:

1. Fairer treatment across advice, banking, insurance, and investments.
2. Faster access to innovative financial services via sandboxed pilots.
3. Safer engagement, as the FMA clamps down on scams and improves transparency.

Our view

The FMA's 2025 Financial Conduct Report underscores a continued commitment to fair conduct, backed up with focused supervision and enforcement. The Report appreciates that flexible, efficient regulation is essential for genuine market innovation and access in New Zealand.

Get in touch

If you would like an assessment of how your business could be impacted by the FMA’s focus, reach out to your usual Simpson Grierson contact or one of our specialists below.