New Zealand’s financial markets regulator has identified managing conflicts from commission-based remuneration as a priority enforcement focus for 2026/27, targeting insurance and mortgage advisers whose conduct adversely impacts clients in vulnerable circumstances. The Financial Markets Authority’s (FMA) Financial Conduct Report (FCR) 2026/27, published June 30, 2026, cites reports of misconduct motivated by high upfront commissions, unmanaged conflicts leading to unsuitable advice, inappropriate replacement business, and fraudulent activity.
FMA chief executive Samantha Barrass, speaking separately at Financial Advice New Zealand’s (FANZ) Advice Policy Summit in July 2026, was clear that the regulator’s focus is on conduct rather than commission structures themselves: “The FMA is not opposed to commission, nor leading a review on the level of commissions. It is one of several legitimate forms of remuneration in these sectors. Our focus is on how conflicts are managed, which is a regulatory requirement.”
The FCR is direct about what has prompted the focus. The FMA continues to receive reports of misconduct motivated by high upfront commissions and is aware of instances of unmanaged conflicts leading to poor or unsuitable advice, inappropriate replacement business, and fraudulent activity. The FMA states it is aware of high upfront commissions for financial advice across life, health, and disability insurance products and KiwiSaver, which increase the risk of consumer harm. It also notes inconsistencies in how advisers disclose ongoing, or servicing, commissions. The FCR sets out precisely what the FMA will do: it will triage complaints and reports from product providers to prioritise investigation of adviser conduct that adversely impacts people in vulnerable circumstances and will prioritise mortgages, and life and health insurance products, including such products being sold through misleading or fraudulent activities.
The remuneration finding connects directly to the FMA’s Access to Financial Advice Review, published March 2026. That review found that, across KiwiSaver providers and advisers, around 10% of consumers engaged in annual reviews, with the most common approach being annual emails that include general information and ask clients to get in touch if they would like a review or financial advice. For life insurance, product providers indicated they had expectations of advisers providing ongoing servicing to clients. The FCR links this finding to its 2026/27 focus, noting that certain commission structures can, at times, prioritise new business over the servicing of existing clients. The FCR’s key questions for boards and executives make the expectation explicit: how do advisers explain to clients what they can expect in terms of ongoing service and advice, and how do they disclose remuneration for ongoing commissions?
Christopher Walsh, founder of consumer finance website MoneyHub, which published a plain-English guide to the access to advice review on August 10, 2026, said the servicing picture reflects structural incentives rather than consumer disengagement. “If an adviser or provider receives ongoing payments connected to your products, an annual review isn't a favour – it’s the service the payment is for. The 10% figure isn’t a story about lazy consumers; it’s a story about an industry that gets paid whether or not it calls you,” Walsh said.
Beyond the commission servicing question, the FCR elevates insurance fraud to a standalone enforcement priority for 2026/27. The FMA defines insurance fraud as deceit or misrepresentation in the process of obtaining, underwriting, or claiming on an insurance policy and notes it can include providers taking out insurance policies for deceased or fictitious policyholders – so-called tombstoning – or failing to disclose information relevant to underwriting assessments, such as pre-existing health conditions or family history. The FMA notes that the impact of insurance fraud can be either direct, resulting in a consumer being unable to claim on a policy or holding duplicate policies, or indirect, through the resulting rise in insurance premiums. It states it has already removed several financial advisers from the market for insurance fraud.
The access to advice review identified a further conduct risk relevant to brokers. Legal firm Chapman Tripp observed that smaller financial advice providers, rattled by uncertainty about their capacity to meet obligations under the Code of Professional Conduct for Financial Advice Services, are tending to focus on broader-scoped advice with more complex processes, to the detriment of smaller or unsophisticated clients who are regarded as uneconomical to deal with.
The FMA’s position is that the financial advice regime already allows flexibility for financial advice providers to decide the nature and scope of advice, and that some consumers may only require advice that is right-sized to their circumstances. Walsh described the effect: “Advisers default to the full six-step process even when you only need help with one thing, so simple questions become expensive, slow engagements – and people with modest balances get told they’re not commercially viable. An adviser who says narrow advice isn’t possible is describing their business model, not the law.”
The FCR and access to advice findings arrive as the FMA’s enforcement footprint expands. In the 12 months to June 2026, the FMA’s enforcement action against insurers resulted in almost $29.7 million in pecuniary penalties and payments under enforceable undertakings. The FMA became New Zealand’s single conduct regulator for financial markets on July 1, 2026, absorbing consumer credit oversight from the Commerce Commission.
In a separate line of work, the FMA has identified gaps in how some insurers govern and monitor non-monetary benefits and short-duration sales campaigns offered to intermediaries, including brokers and financial advisers. The regulator says it will use its supervisory and monitoring activities to assess whether insurers' Fair Conduct Programmes are operating effectively under the Conduct of Financial Institutions (CoFI) regime. The number of financial advisers in New Zealand grew 8.4%, from 8,472 in 2024 to 9,184 in 2025, with life, health, and disability insurance remaining the second most popular specialist pathway.
