#14 Financial Conduct Report

We’ve released our 2025 Financial Conduct Report.

This report outlines the key risks and opportunities the FMA will focus on over the next 12 months. It reflects our outcomes-focused approach and provides clarity for industry on our regulatory priorities.

We encourage Boards, Executives and Leaders within financial services to consider how these insights can support better outcomes for consumers and markets.

Transcript

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Heidi

Kia ora and welcome to 5 minutes with the FMA. Today we're talking about the financial conduct report. This report outlines the key priorities for the FMA for the next 12 months and the rationale behind them. Here to talk about it, we're joined by General Council Liam Mason, welcome Liam.

Liam

Thank you.

Heidi

Now Liam can you tell us why the FMA has decided to produce this report.

Liam

Sure. Earlier this year we published our approach to outcomes focused regulation. Will we explain that we need to make choices to focus our resources on the most significant risks and opportunities for New Zealand businesses, consumers and investors. Now the financial Conduct report lays out what we see as the key risks. And how we're going to tackle them over the next 12 months. It's intended to give clarity to industry around what they can expect us to focus on and it's an important communication tool that we can use to set out our understanding of the risks in the market and do that on an annual basis and now we're responding to them.

Heidi

So what should the industry do with the financial conduct report?

Liam

So we'd like boards and executives, leaders and all firms to read this and to use the insights there to help to improve the outcomes that their business produces for consumers.

Heidi

Now I understand that the report is broken into sectors, but of course there's a lot that we do that cuts across all sectors that we regulate and something that we do talk about a lot is easing regulatory burden. What's happening in that space.

Liam

You're right. A number of the priorities cut across sectors. And one of these is looking to reduce compliance burden and complexity for licenced firms by introducing a single conduct licence. We'll also be supporting market access with our regulatory sandbox pilot by supporting firms to test new products and services. It helps us to get a better understanding of where the law might hinder innovation, and it's also going to help consumers to get faster access to new products and new services.

Heidi

As you say, things are moving fast in financial markets with new risks, products and threats. What are we planning?

Liam

So we're looking to increase our understanding of emerging risks and opportunities, particularly around virtual assets, including tokenization and private markets and operational. Regulators around the world. Interested in strengthening public markets in addressing vulnerabilities that they see in private markets, and we'll be doing the same. We'll be publishing research on New Zealand's uptake of virtual assets. We're also going to continue to publish warnings for the public where we see virtual assets being used to as part of or to aid investment scams.

Heidi

Speaking of scams, what are we doing in that space?

Liam

So New Zealanders are losing hundreds of millions of dollars a year to scams and our focus is going to be on scam operations in New Zealand where we can take the most meaningful action against bad actors. We'll also be continuing to support other agencies and Banks and technology providers to help to disrupt scams to raise public awareness of scams and help the public to know how they can protect themselves.

Heidi

And I understand that we're also focused on making sure that consumers know how to make a complaint about their financial services provider. 

Liam

Absolutely. We want consumers to know about their rights, to complain and to be confident to do so. We want firms to address these complaints effectively. Doing this protects consumers interests and it also helps firms to improve their services. Connected to that is remediation fixing things when they go wrong. This will continue to be a focus for us across all sectors. Particularly banking, insurance and non-bank deposit takers. Given the introduction of the new conduct of financial institutions regime and our recent work in this area.

Heidi

So a lot of our work is about maintaining trust in the financial sector and a part of that is about the safekeeping of client money. What are we doing in that space?

Liam

Yeah, keeping client money and property safe is crucial to confidence, so we'll be working with the Ministry of Business, Innovation and Employment to see if we can find ways to enhance custody protections in New Zealand. It's important because. Poor custody ultimately can aid fraud, but strong custody is not just about preventing fraud. It's also critical for confidence that consumers can have in our financial services.

Heidi

And you mentioned operational resilience earlier. What are we doing there?

Liam

So with operational resilience, we really appreciate the efforts that industry. Has made in recent years to strengthen their operational resilience and to support our oversight. We're urging all firms to make any technology uplifts that they need to. And to strengthen the oversight of service providers so that we can minimise disruption when outages or other events and help to protect consumers and our markets.

Heidi

Liam is there anything else industry should be aware of?

Liam

Well, in addition to these priorities, the FMA will continue to do its work across the breadth of the agreement. There are also sections in the report specific to the sectors we regulate, and it's important that firms within each sector understand the focus that we're we're going to have for them. In addition, some point over the next year, we expect Consumer credit responsibility to be transferred to the Financial Markets Authority. From the commerce. Commission. We will be publishing our initial priorities for that closer to the time of transfer and that sector will be included in future financial conduct reports.

Heidi

And if people have questions or would like to engage with the FMA about the financial conduct report, what should they do?

Liam

First stop as your relationship manager or designate and you can ask them any questions that you have about the report.

Heidi

Wonderful. Well, thank you so much for joining us today. Liam, if you'd like more information about the financial conduct report, you can find that on our website at www.fma.govt.nz. Thanks for joining us. See you next time.