The Conduct of Financial Institutions (CoFI) regime has entered into full effect since 31 March, with the Financial Markets Authority (FMA) expecting insurers, banks and non-bank deposit takers to put New Zealand consumers at the forefront of their decisions and actions.
FMA director of deposit taking, insurance and advice Michael Hewes said, “CoFI is fundamentally about treating customers and potential customers fairly – this is the fair conduct principle.
“We expect financial institutions to be analysing how their products are performing, communicating effectively with consumers and acting quickly if something is not working as it should be.”
As part of licensing requirements, financial institutions are required to establish, implement and maintain a fair conduct programme.?The programme needs to be designed in a way that ensures compliance with the fair conduct principle, and organisations need to display summary information about it on their website so consumers can understand how their chosen provider should be treating them.?
CoFI also significantly expands the FMA’s mandate as a conduct regulator to include financial institutions and gives new responsibilities in terms of licensing, monitoring and enforcement. The FMA’s supervision of financial institutions under CoFI will use the full spectrum of tools available, including engagement meetings, monitoring reviews and thematic reviews looking at crucial issues across the sector.?The regulator’s focus will be on the?outcome?of financial institutions treating consumers fairly, while giving firms flexibility, where appropriate, with?how?they achieve this.
“We want to thank the financial institutions for their efforts in getting licensed by 31 March. In total, 77 have been licensed by the FMA – 17 banks, 46 insurers and 14 non-bank deposit takers (credit unions, building societies and some finance companies). We have been working closely with them throughout the process and will continue to listen, provide guidance, and communicate our expectations,” Mr Hewes said.
“New Zealanders should have access to the financial products and services they need, when they need them, and have trust and confidence that products and services will perform as expected and meet their needs. We expect CoFI to achieve that.”
In 2018 and 2019, the FMA and Reserve Bank of New Zealand undertook joint reviews into the conduct and culture of life insurers and banks. The FMA also undertook a conduct and culture review of fire and general insurers. The reviews also led to the introduction of the Financial Markets (Conduct of Institutions) Amendment Act 2022, also known as COFI.