New Zealand Financial Markets Authority publishes insights from pre-implementation review of fair conduct programmes under the CoFI regime

The New Zealand Financial Markets Authority (FMA) released an insights report summarising its review of fair conduct programmes (FCPs) submitted by financial institutions ahead of the commencement of the Conduct of Financial Institutions (CoFI) regime. The report highlights examples of good practice observed in firms’ programme design and flags areas of evolving conduct risk that institutions should consider as they finalise and improve their approach to fair consumer treatment. CoFI, established through the Financial Markets (Conduct of Institutions) Amendment Act 2022, expands the FMA’s conduct mandate by requiring financial institutions to be licensed and to establish, implement, maintain and comply with an effective FCP. The FCP is intended to comprise policies, processes, systems and controls designed to ensure compliance with the fair conduct principle, namely that financial institutions must treat consumers fairly. The FMA’s review covered FCPs from a range of entities differing in size, product offering and consumer profile, and found that many had taken a comprehensive approach aligned to their nature, size, complexity and risk profile, with some going beyond minimum requirements. In the first years of the regime, the FMA indicated it will continue an educative and collaborative approach as firms refine their programmes, and it expects to undertake a more in-depth review of FCPs later and publish further findings supported by evidence of how programmes operate in practice.