The Financial Markets (Conduct of Institutions) Amendment Bill, or what has come to be known in the industry as CoFI, has been passed in Parliament – marking what the Financial Markets Authority (FMA) believes will be a culture shift for New Zealand’s financial services.
“[This] will establish a new financial conduct scheme that ensures financial institutions put customers before profits,” stated Minister of Commerce and Consumer Affairs David Clark after the bill passed its third reading on Tuesday night.
“This work comes at an important time as the government supports Kiwis through the current cost-of-living crisis, and will help to ensure they’re not unknowingly paying for services they do not need, or taking on debt they cannot afford.”
Clark, the MP in charge of the legislation, went on to say: “People place a lot of trust in their banks and insurers which play an integral part in their lives, and this new regime will help to tilt the balance back towards the consumer by protecting them from bad behaviour that could leave them vulnerable.”
CoFI, which amends the Financial Markets Conduct Act 2013, is aimed at ensuring that financial institutions and their intermediaries comply with a principle of fair conduct and associated duties and regulations.
“It follows reviews by the Reserve Bank of New Zealand and Financial Markets Authority which found banks and insurers in New Zealand lack focus on good customer outcomes, and have insufficient systems and controls to identify, manage, and remedy conduct issues,” added the minister, whose camp “strengthened the bill along the way” so it still provided competition and choice.
For the FMA, this legislative development signals a shift in culture as regulatory gaps are filled.
“This will enhance the culture of core financial services in New Zealand, with a focus on putting conduct and the fair treatment of customers at the heart of every business,” commented FMA chief executive Samantha Barrass. “Firms will be held to account by the FMA for the way they sell products and look after their customers. This brings New Zealand into line with comparable countries overseas.
“It is critical that consumers get the financial products and services they need throughout their life and receive fair treatment in all their dealings with financial institutions. Consumers should have trust and confidence that the institutions who sell products and services to them will always do the right thing.”
According to the government, the new regime is expected to come into full force in early 2025.