The Financial Markets Authority (FMA) has published its first Financial Conduct Report, launching what it intends to be a yearly roadmap outlining regulatory expectations for financial institutions, including insurers.
The report provides insight into the FMA’s supervisory focus over the next 12 months, setting out conduct risks, enforcement themes, and support for innovation within the financial sector.
The FCR is designed for a broad audience within the financial industry – ranging from insurers and banks to fund managers and advisers – with an emphasis on improving market conduct through transparency and early engagement.
FMA chief executive Samantha Barrass said the report is aimed at offering industry participants a clearer understanding of how the regulator plans to address sector-wide issues.
“We are responding to the clear desire for transparency, certainty, and improved engagement with the sector by setting out our priorities and the drivers behind what we’re doing,” she said. “Importantly, our report provides context and reasoning for these priorities by outlining key conduct risks and opportunities on the FMA’s radar over the next 12 months and how we plan to address them.”
The report identified multiple conduct areas where the FMA expects improved industry performance. Among these, the handling of customer complaints and timely remediation of issues were highlighted.
The FMA stated it expects firms to have accessible and effective complaint channels and to respond promptly to signs of customer harm.
Investment fraud was identified as a rising concern. The FMA reported a noticeable increase in scam activity affecting New Zealand consumers, with cases growing in complexity.
Barrass said the FMA is collaborating with other agencies and businesses to curb scam operations that originate locally.
“We will continue to issue public warnings that highlight the high incidence of these misconduct cases,” she said.
Another area of focus is the protection of client funds and assets. The FMA emphasised that strong custody frameworks are essential not only for investor confidence but also for market integrity.
Collaboration is underway with the Ministry of Business, Innovation and Employment (MBIE) to explore regulatory changes aimed at strengthening custody rules.
“Strong custody is not just important to protect against fraud. Robust client asset protection provides confidence in our regulatory environment,” Barrass said.
In addition to its enforcement agenda, the FMA reiterated its commitment to facilitating responsible innovation.
The report noted progress in the rollout of a single conduct licence regime and the ongoing operation of a regulatory sandbox for select financial technology firms.
Barrass said enabling limited-scale testing of new services in a controlled setting enables the FMA to identify where existing regulations may unintentionally restrict innovation or lead firms to seek unregulated pathways.
Emerging risks such as virtual assets, tokenisation, and operational resilience are also under review. The FMA said it will continue monitoring these developments to assess regulatory readiness and potential impact on market conduct.
The release of the report comes in parallel with proposed reforms intended to streamline compliance requirements across the financial sector.
Three bills – the Credit Contracts and Consumer Finance Amendment Bill, the Financial Markets Conduct Amendment Bill, and the Financial Service Providers Amendment Bill – passed initial readings in Parliament in May.
Commerce and Consumer Affairs Minister Scott Simpson said the legislative package is aimed at removing inefficiencies in the current regulatory framework.
Key proposals include merging conduct licensing requirements, ending personal liability for senior managers on compliance breaches, and giving courts broader discretion in legacy disclosure cases.
The FMA’s oversight powers are also set to expand under the reforms, enabling closer monitoring of institutional conduct across the financial system.
