New Zealand Financial Markets Authority publishes thematic review on financial institutions’ product and service reviews under the CoFI regime

The New Zealand Financial Markets Authority (FMA) published a thematic review assessing how financial institutions review products and services to ensure they continue to meet consumers’ requirements and objectives, as required through fair conduct programmes under the Conduct of Financial Institutions (CoFI) regime. The report shares observed good practices and highlights common weaknesses that could undermine proactive risk identification and fair consumer treatment. The review covered a sample of 10 deposit takers and 10 insurers, all of which reported completing reviews, but with wide variation in objectives, cadence, scope, governance and reporting. Scheduled reviews typically run on a one-to-three-year cycle, often supplemented by reactive triggers such as complaints and material product or environmental changes; the FMA flagged that overreliance on triggers or rigid cycles can delay detection of issues. Areas for improvement include reviews that lack a consumer-outcomes lens, less frequent attention to off-sale or legacy products, limited consideration of intermediaries and dispute resolution scheme insights, insufficient focus on legacy systems and technology risks, governance that relies on the absence of negative reporting, weak tracking of review actions, and inconsistent approaches to communicating review outcomes to consumers. The FMA encouraged all financial institutions to use the report’s commentary and examples to strengthen their approach and noted that proactive product and service reviews will remain a continuing area of supervisory focus.