Improving conduct of financial institutions

Reforms aimed at improving the conduct of financial institutions and their intermediaries in providing services and products to consumers are included in the Financial Markets (Conduct of Institutions) Amendment Bill. This introduces a licencing regime for banks, insurers and non-bank deposit takers and includes requirements for:

• financial institutions and intermediaries to comply with a ‘fair conduct principle’ to treat consumers fairly including by having regard to their interests
• financial institutions to establish, implement, and maintain an effective ‘fair conduct programme’ which operationalises the fair conduct principle through policies, processes, systems, and controls throughout the business (from the governance level to day-to-day interactions with consumers)
• financial institutions and intermediaries to comply with the fair conduct programme (and that financial institutions ensure that intermediaries comply)
• financial institutions and intermediaries to comply with regulations in relation to incentives based on volume or value sale targets.

The Ministry of Business, Innovation and Employment (MBIE) has published two discussion documents for consultation on the new conduct of financial institutions regime. MBIE has indicated that the Bill should be passed by the end of the year, with regulations finalised in 2022, and the regime coming into force in 2023.

For more, see:

• MinterEllisonRuddWatt’s article Regulations to support the new regime for the conduct of financial institutions
• our submission on the Bill.