A thematic review by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has found that while all 20 participating financial institutions conduct product and service reviews, practices are uneven, with less frequent scrutiny of off-sale and legacy products, variable communication with customers, and developing processes for tracking remedial actions.
The FMA reported that every firm involved in the review carries out some form of product and service review, but approaches differ according to size, complexity, and existing systems. Some institutions have structured review programmes with defined ownership, while others are still building consistent processes and documentation.
Executive director of licensing and conduct supervision Clare Bolingford said systematic review activity remains central to the regulator’s expectations. “When financial institutions proactively review products and services, they can identify and respond to consumer harms, and help promote improvements in the provision of financial services that meet the needs of consumers. This supports some of the key outcomes we want to see for consumers and financial markets, including fair services, quality ongoing service, and well-informed consumers,” Bolingford said.
Bolingford said insurers and deposit takers should use the findings as a reference point for strengthening their review practices, but stressed that “it does not create new legal obligations.” She noted that this area will remain a standing focus. “As part of our normal supervisory activity, financial institutions can expect proactive reviews of existing products and services to be a continued area of interest for the FMA,” Bolingford said.
A key result of the review is the identification of off-sale and legacy products and services as relatively under-reviewed compared with on-sale offerings. For insurers, this has direct implications for closed books and older products that may still be in force but no longer actively marketed.
“For example, off-sale and legacy products and services were often reviewed less frequently than on-sale products and services. Risks may be heightened where consumers interact with the product or service less frequently, as it is less likely issues will be surfaced by consumers. The FMA’s fair dealing enforcement activity has often related to off-sale or legacy products. Conducting regularly scheduled reviews may help prevent the types of issues that lead to consumer harm and potential enforcement action,” Bolingford said.
The report also points to the importance of detecting and addressing systems weaknesses early. Drawing on the FMA’s broader Financial Conduct Report, Bolingford said conduct risks in the deposit-taking and insurance sectors “remain high from reliance on legacy technology, systems, and manual controls and processes, as well as inadequate staff training. Failures in systems and technology have led to consumer harm in the past.”
The FMA is encouraging insurers to ensure that consumer needs are embedded in the design and execution of reviews, and that review schedules are driven by risk. “Companies should ensure consumer requirements and objectives are central when they design and carry out reviews, and should adopt a risk-based and flexible review schedule that can respond to internal and external factors,” Bolingford said. The review sets out expectations for stronger governance and more consistent board oversight of review outcomes. “Strengthening governance and board reporting to ensure accountability and oversight is key, as is improving consumer communication strategies to build trust and transparency,” Bolingford said.
Embedding consumer vulnerability considerations is another theme. The FMA wants institutions to test whether products remain suitable and accessible for a range of customer circumstances over time, not only at inception. Bolingford also highlighted the need for clearer implementation pathways. “Companies should ensure they have established clear processes for tracking and implementing review outcomes, including post-review monitoring,” Bolingford said.
The report notes that communication with customers about the results of reviews varies across firms. “Communication with consumers about review outcomes is inconsistent; some firms have mature strategies although some lack clarity on when and how to inform consumers. Action tracking from reviews is a developing area, with good practice involving structured follow-up, ownership, and effectiveness monitoring,” Bolingford said.
The FMA found that many institutions are not making full use of insights from complaints and external dispute resolution schemes when reviewing products and services. “Dispute Resolution Services were overlooked as a source of insights by the majority of participants, although we consider them to be a valuable resource. As noted in our complaints info sheet, complaints can offer important insights into what is and isn’t working well,” Bolingford said. For insurers, the findings suggest that integrating complaints data and dispute outcomes into product governance frameworks remains an area for development, particularly where patterns could indicate systemic issues or emerging conduct risks.
The thematic review sits alongside the FMA’s annual report for the year to June 30, 2025, which outlines an ongoing shift toward outcomes-focused and intelligence-led regulation, while maintaining core activities in licensing, monitoring, investigation, enforcement, and policy work. For the insurance sector, a central development is the implementation of the Conduct of Financial Institutions (CoFI) regime from March 31, which brings day-to-day conduct regulation formally into scope for insurance providers. Under CoFI, financial institutions must maintain a documented fair conduct programme aimed at ensuring customers receive consistent treatment across the product lifecycle, including onboarding, changes to cover, claims management, and complaints handling.
The annual report also records the FMA’s work with the Ministry of Business, Innovation, and Employment (MBIE) on capital markets reform and scam prevention, and the granting of exemptions to reduce unnecessary regulatory burdens in specific circumstances. In parallel, the FMA has been preparing for the Contracts of Insurance Act 2024, which updates New Zealand’s insurance contract law framework.
