A New Zealand insurance broker who disclosed a client’s information to a third party – without consent and inaccurately – has been found to have breached the Code of Professional Conduct for Financial Advice Services and agreed to a $20,000 ex-gratia settlement. The case, published by Financial Services Complaints Limited (FSCL) in July 2026, illustrates a structural compliance risk that New Zealand’s principal financial conduct regulator has since placed among its sector-wide priorities.
The broker held concurrent mandates for a motel operator, identified as Mark, and the owner of the premises Mark leased. During Mark’s business insurance renewal, the broker recorded that Mark had confirmed there were no Ministry of Social Development (MSD) contracts or tenants at the property. While separately advising the landlord on building insurance for the same premises, the broker passed that information to the landlord without Mark’s consent – and passed it on inaccurately. The landlord issued lease cancellation notices, in part on the basis that Mark had misled the broker. Mark incurred legal costs successfully contesting those notices and sought to recover them from the broker.
FSCL found the broker had breached Code Standard 5. The information qualified as “client information” because the Code includes all information about the client collected by the person who gives financial advice. While the information was relevant to the landlord and their insurer, that did not create a reasonable excuse to disclose it without first obtaining Mark's permission. The information relayed by the broker was also inaccurate – Mark’s response to the broker’s question differed from what the broker told the landlord. FSCL facilitated settlement discussions. The broker offered $20,000 towards Mark’s legal costs, which FSCL considered fair because the broker’s actions accounted for some but not all of the reasons the landlord had issued the cancellation notices. Mark accepted and the complaint settled.
Code Standard 5 of the Code of Professional Conduct for Financial Advice Services 2025, in force from November 1, 2025, requires a person giving financial advice to take reasonable steps to protect client information against loss and unauthorised access, use, modification, or disclosure. Client information should only be disclosed for the purpose of giving financial advice to that client, for a directly related purpose, where required or permitted by law, or where the client has agreed.
The Insurance Brokers Association of New Zealand (IBANZ) Code of Professional Conduct, also effective November 1, 2025, mirrors those obligations for IBANZ members and goes further. Under IBANZ Standard 2, acting with integrity requires members to avoid or appropriately manage any conflict of interests. Critically, the IBANZ Code applies to all clients – retail and wholesale – without limitation, reflecting the association’s position that every client is entitled to the same standard of service regardless of their commercial sophistication.
The dual-client structure in this case – a broker simultaneously advising parties on both sides of a commercial tenancy – is the kind of arrangement both Codes are designed to govern. Where the same adviser holds information obtained from one client in their advisory capacity, the confidentiality obligation to that client does not diminish because the information is also relevant to another client they serve. Disclosure requires the originating client’s agreement. That requirement was not met here.
The Financial Markets Authority’s (FMA) Financial Conduct Report (FCR) for 2026/27, published on June 30, 2026, identifies managing conflicts from remuneration structures as one of four cross-sector themes prioritised across financial advice and consumer credit. The FMA stated it is aware of instances of unmanaged conflicts leading to poor or unsuitable advice, and that these practices can cause significant financial harm to consumers. The FMA said it will continue to use its full range of regulatory interventions to address poor conduct. The FMA’s stated focus in the FCR centres primarily on commission-driven conflicts. The FSCL case involves a different mechanism – the flow of client information across overlapping mandates – but the structural concern is the same: advisory relationships that are not actively managed when obligations to different clients compete.
FSCL’s 2024-25 Annual Report recorded 1,469 complaints and 373 disputes opened – increases of 3% and 4%, respectively, on the prior year. Financial advisers, including mortgage and insurance brokers and wealth advisers, accounted for the largest share of cases investigated at 23%. Business insurance investigations reached 31 in 2024-25, up from 19 the prior year. Of 134 total business insurance cases across FSCL’s 15-year history, 114 occurred since 2019. Total compensation negotiated or awarded reached $1,750,706 in 2024-25, up from $1,131,493 the prior year.
FSCL stated that insurance brokers have legal obligations to protect their client’s information and may be liable to compensate clients if unauthorised disclosure causes financial loss. For brokerage firms managing clients with connected commercial interests – landlord and tenant, vendor and purchaser, or related entities with separate insurable interests – the mutual relevance of information to both parties does not substitute for consent. Sharing it requires the originating client’s agreement under both the Code and the IBANZ standards. Brokerage principals reviewing their conflict management protocols in response to the FMA’s 2026/27 priorities would be well served by examining whether those protocols specifically address dual-client scenarios of this kind. The exposure in this case also ran through legal costs rather than an insurance claim – a reminder that the financial consequences of a confidentiality breach may not take the form a broker would typically anticipate.
