New Zealand’s financial conduct regulator has intensified pressure on licensed insurers over intermediary incentive governance, complaints handling, and distribution accountability – with industry data confirming the regulatory heat is arriving at a moment of rising dispute volumes and a growing retirement advice gap. FMA chief executive Samantha Barrass delivered the keynote address at the inaugural Financial Advice New Zealand Policy Summit on July 28, 2026, six weeks after the regulator published a formal paper targeting insurer practices around soft commissions and short-duration sales campaigns.
For insurers, the commission conflict theme in Barrass’s address is not theoretical. The FMA has identified gaps in how some insurers govern and monitor soft commissions offered to intermediaries and has indicated it will incorporate compliance testing into its ongoing supervisory work under Conduct of Financial Institutions (CoFI), with insurers found to be non-compliant facing potential regulatory consequences.
The FMA’s Insurer Benefits and Campaigns Insights, published June 11, 2026, examines how insurers are managing non-monetary benefits and short-duration sales campaigns – incentives the regulator describes as capable of heightening the risk of unfair treatment of consumers. The paper followed a letter to insurer chief executives in June 2025, after the FMA observed some insurers offering non-monetary benefits and short-duration sales campaigns designed to drive business from intermediated channels, including brokers, advisers, and other third parties.
FMA director of deposit-taking insurance and advice Michael Hewes said that while practices have moved on since the regulator’s 2018 soft commissions review, it is important that insurers manage the risks appropriately. “These benefits and campaigns, or soft commissions, have a place but insurers should actively consider these risks to ensure their fair conduct programmes are designed to support fair treatment of consumers,” Hewes said. Barrass reinforced at the summit that product providers bear responsibility for ensuring products sold through unregulated third parties – including car dealers – are fair, affordable, and beneficial to consumers, and that the FMA will continue to monitor this under CoFI. The FMA has issued 77 licences under the CoFI framework, including to 46 insurers.
The Insurance Council of New Zealand (ICNZ), whose members collectively write more than 95% of all general insurance in New Zealand, engaged directly with the FMA on CoFI throughout 2025. In its 2025 Annual Review, the ICNZ noted that the “pace and volume of regulatory change continued to present challenges for the insurance sector,” while confirming that all ICNZ members had secured the required CoFI licences or exemptions prior to commencement on March 31, 2025.
Barrass identified systemic gaps in how advice providers record and act on complaints – a finding that lands against a backdrop of record dispute volumes and documented internal resolution failures across the insurance sector. The Insurance & Financial Services Ombudsman (IFSO) Scheme accepted 600 disputes for investigation in the year to June 30, 2025, a 25% increase on the prior year and more than double the 2022 total, after receiving 4,293 approaches from consumers. Of those disputes, 67% related to general insurance products and 29% involved health, life, or disability insurance. IFSO Ombudsman Karen Stevens said: “We’re seeing a growing number of complaints that remain unresolved even after going through the financial service providers’ internal processes. These cases escalate into disputes that require formal investigation by the IFSO Scheme.”
ICNZ’s own Fair Insurance Code data for 2025 shows 1.31 million claims were handled by member insurers, with 28,033 complaints referred to internal dispute resolution processes and 603 subsequently escalated to external schemes. The FMA’s Financial Conduct Report noted that insurers’ use of complaints data “varies” and singled out travel insurance as consistently among the most complained-about products, with targeted supervisory work on that category planned for 2026/27.
The FMA documented a sharp rise in mortgage fraud referrals – from approximately one per year prior to 2023, to seven in 2024 and 21 in 2025 – with 61 charges laid against six individuals in cases before the courts. The regulator also flagged fraudulent KiwiSaver first-home withdrawal claims, including false eligibility assertions, as an active area of focus for the year ahead.
The FMA identified a structural advice gap in retirement income drawdown as KiwiSaver matures, highlighting an area of growing importance for financial advisers and insurers. KiwiSaver funds under management reached $124.5 billion as at March 2026, up 10.69% over the year, with total contributions reaching $12 billion in the preceding 12 months. The average member balance stood at $41,286 as at December 2025, up 11.3% on the prior year, while members aged 61 to 65 held an average balance of $77,927.
As that cohort moves into drawdown, demand for structured decumulation advice – spanning KiwiSaver, life and income protection insurance, and other assets – is expected to grow. Barrass called on industry bodies to develop professional development pathways to address the shortfall and confirmed the FMA will publish case studies later in 2026 demonstrating how New Zealand’s principles-based regime can accommodate scaled and decumulation-focused advice delivery. “We encourage the sector to innovate. That flexibility can make advice cheaper, and easier to deliver, while still being compliant and offering adequate consumer protection,” Barrass said.
