The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko took over consumer credit regulation from the Commerce Commission on July 1, 2026, becoming New Zealand’s single conduct regulator for financial markets. The shift lands on a sector already absorbing close to $29.8 million in penalties and enforceable undertakings against insurers over the prior 12 months, a backdrop that gives the credit handover added weight for firms watching how the FMA applies its conduct expectations across sectors.
The transfer was enabled by the Credit Contracts and Consumer Finance Amendment Act 2026. Clare Bolingford, the FMA’s executive director licensing and conduct supervision, said combining credit oversight with the rest of financial services supports responsible lending and consumer protection, the FMA said in its media release on the transfer. “Consumer credit plays an important role in helping New Zealanders manage their finances and access funds when needed, from funding major purchases through to meeting everyday living costs,” Bolingford said.
The FMA released its second annual Financial Conduct Report (FCR) the day before, setting out priorities for 2026/27 across credit, insurance, banking, advice, capital markets and investment management. Chief executive Samantha Barrass framed the credit addition as a step that “will strengthen consumer protection and enable more consistent oversight across the financial system.” She linked the timing to “a global environment of significant uncertainty and heightened risk,” arguing this makes a resilient financial system more important.
Four cross-sector themes anchor the 2026/27 report: managing conflicts from remuneration structures, product design, use of complaints data, and fraud detection and prevention. Remuneration conflicts apply to both consumer credit and financial advice; complaints handling is flagged separately for credit and for insurance. Notably, the FMA plans to examine agreements between lenders and intermediaries, “such as motor vehicle dealers and insurers,” as part of its conflicted-remuneration work in consumer credit. Insurers face three named focus areas: product design, complaints data, and fraud detection. The fraud category splits mortgage fraud from insurance fraud, with the latter covering “tombstoning,” where policies are taken out for deceased or fictitious policyholders, and non-disclosure of health or other information relevant to underwriting.
Four enforcement outcomes over the past year split into two categories. Three involve systems that failed to calculate or apply terms correctly; one involves how a calculation method was disclosed to customers. On the systems side, IAG New Zealand admitted to fair dealing breaches and paid a $19.5 million pecuniary penalty after the FMA found it had made false or misleading representations about its insurance products. Around 269,000 customers were affected, with overcharges totalling roughly $35 million. IAG chief executive Amanda Whiting said the company’s priority since identifying the issues had been to put things right for affected customers through apology and refunds.
Tower was ordered to pay a $7 million penalty for misleading representations that led to more than $11 million in overcharges, after admitting it misled customers in invoices about its multi-policy discount since September 2016. Roughly 61,000 customers, or about 90,200 policies, were affected. Tower chairman Michael Stiassny said the company accepted it had made mistakes and apologized to customers who were charged incorrectly.
FMG Insurance Limited and Farmers’ Mutual Group agreed to pay $2.1 million in lieu of a pecuniary penalty after admitting misleading representations tied to specified-item charges and incorrect inflation adjustments on sums insured, in a case the FMA announced in February 2026. FMG chief executive Adam Heath apologized to clients and members for the historical issues and said refund processes were being completed.
On the disclosure side, Southern Cross Travel Insurance’s case centred not on a calculation error but on how its discount terms were described to customers. Southern Cross Benefits Limited admitted liability for fair dealing breaches and paid $1,105,000 to the Crown under an enforceable undertaking, after misrepresenting how discounts would apply to customer premiums. For insurance professionals, that distinction matters: three cases point to a need for system and reconciliation checks, while the fourth points to a need for clearer customer-facing language about how advertised terms are actually calculated.
Dispute data referenced in the FCR points the same direction. The Insurance & Financial Services Ombudsman (IFSO) Scheme accepted 600 disputes for investigation in the year to June 30, 2025, a 25% rise on the prior year and more than double the 285 recorded in 2022. Financial Services Complaints Limited (FSCL) logged 1,469 complaints over the same period, up slightly from 1,426 the year before and roughly twice the volume recorded five years earlier. Against this, the FMA said insurers’ use of complaints data “varies” and singled out travel insurance as consistently among the most complained-about products, with targeted work on that category planned for 2026/27.
The FMA has not given a specific start date for its targeted monitoring of lender-intermediary agreements, including those between motor vehicle dealers and insurers, but the work is named among its 2026/27 credit priorities. Separately, the Contracts of Insurance Act 2024 is set to take effect in November 2027, a deadline the FCR flags as already shaping the FMA’s engagement with insurer boards on plain-language disclosure. Firms still relying on legacy systems of the kind implicated in this year’s penalty cases may find both timelines arrive sooner than expected.
