Countdown to CoFI: Public awareness campaign set to launch
The Financial Markets Authority will soon launch an advertising campaign targeting consumers encouraging them to measure their bank, non-bank deposit taker or insurer’s products and services against the criteria set out in their Fair Conduct Programme.
Friday, March 21st 2025, 11:24AM 
11 Comments
by Kim Savage
The Financial Markets Authority will soon launch an advertising campaign targeting consumers encouraging them to measure their bank, non-bank deposit taker or insurer’s products and services against the criteria set out in their Fair Conduct Programme.
The development and regulator approval of an FCP is the core requirement of the Conduct of Financial Institutions legislation, which takes effect from March 31st. A summary of how the company complies with the principles set out in its FCP needs to be added to institution websites to give consumers access.
Michael Hewes, FMA Director Deposit Taking, Insurers and Advice, told Good Returns consumers are at the centre of the legislation and they need to understand what it means for them. There is also a push from the Commerce and Consumer Affairs Minister’s office for the FMA to ensure messaging flows through to those it is designed to benefit.
“It is unique for us as a Crown entity, to actually spend some money on advertising,” he says.
The highly-targeted consumer campaign for social media will launch at the beginning of April.
“What it does, it highlights to consumers the benefit of CoFI and what they should be looking for when they're dealing with a financial institution such as the FCP summary page on the website.”
The FMA wants consumers to better understand what information is available to them, says Hewes.
“Consumers such as you and I can actually look and think, ‘gosh, are any of these banks the right one to go through?’ and it gives a bit of a deep dive into their complaints processes as well.
“It's a real kind of nice sort of look into a financial institution, to see if they actually meet my needs and decide if this is an institution I want to deal with.”
Consumers will be reminded of their options, says Hewes, if the conduct of an institution is not up to scratch.
“Complain to your institution, complain to your advisor, if it's a deadlock, then you go through to the ombudsman schemes. And we need to promote more use and awareness of those.”
Years of CoFI catch-ups pays off for FMA
Reflecting on the journey through to now when CoFI comes into force, Michael Hewes says all of the guidance issued has been created in collaboration with the sector, with anywhere between 100 to 160 engagements bi-monthly, from c-suite to boards to advisors. The FMA expects to release further insights from its licensing process early next month, but Hewes is confident there is a good level of preparedness at a high level.
“A lot of our focus and effort was supporting some of the smaller, non-bank deposit takers, some of the smaller insurers with less resources. So we went through and put out a lot of additional guidance.
“I led the 2018-19 Conduct and Culture Reports with the Reserve Bank and the industry actually acknowledged there were gaps, and they have worked really, really hard to improve their maturity.
“It is certainly our observation, there's been quite a seismic shift and improvement, and generally they just continue to go through and follow the CoFI track.”
As well as encouraging consumers to hold institutions to account, the FMA is tasked with keeping an eye on the CoFI licence-holders to ensure they continue to comply. But Hewes says early monitoring of the regime will not look too different to now.
“Certainly from a monitoring perspective, the first few months, what we will be doing is just continuing to work with industry, putting out guidance if it's needed, and supporting them,” he says.
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Comments from our readers
On 24 March 2025 at 3:47 pm Aggressively_passive said:
Remember everyone:
"Cowboys belong in the movies, not the financial markets"
- The FMA, 2011
On 25 March 2025 at 12:05 pm Pragmatic said:
COFI is a waste of time & money that will inadvertently penalise consumers and act as a deterrent towards obtaining good advice. The systematic implications of this legislation will be felt for generations to come On 25 March 2025 at 3:43 pm dcwhyte said:
To Amused and Pragmatic - It's not often that I am moved to hit the keyboard to disagree with you two fine contributors.
Having spent a good few years at senior management level in two of NZ's leading life insurance companies (now operating as one) served on the Board of another NZ-owned life company, and spent some time in the financial advice space, it's my considered view that the legislative/regulatory framework enabled by CoFI is entirely appropriate.
A recent speech to IoD from the Chair of the FMA, Craig Stobo, featured the following words -
"The other figure I want to call out is the $215 million returned by banks and insurers.
We have taken nine civil proceedings against well-known banks and insurers for breaches of the fair dealing provisions of the Financial Markets Conduct Act."
That statement alone presents a compelling rationale for the focused and specific regulation of banks' and insurers' conduct.
Financial Advisers' conduct is subject to the Code of Professional Conduct and FSLAA 2019. The CoFI mirror legislation for instos, requiring them to have, and to publish, a Fair Conduct Programme is a necessary piece of the regulatory jigsaw.
The FCP provides Financial Advisers with a mechanism to support recommendations to clients, as long as product providers can produce evidence of adherence to their own FCP.
Where I am 100% in agreement with both of you is the over-reach and duplication being embarked upon by instos in having Financial Advisers dragged into the FCP compliance process.
Despite numerous submissions, presentations, and appearances at Select Committees, urging the exclusion of Class 1 and Class 2 Financial Advisers from CoFI, the Civil Servants and our other employees in Wellington failed miserably to set out the legislation properly in this regard.
As FAPs and Class 1 and 2 FAs are already subject to client conduct regulation, the ommission of an exemption from CoFI was a fundamental error.
Despite earlier promises to repeal CoFI from the then Opposition, no such steps have been taken, nor are they likely to emerge after Andrew Bayly's departure.
So like it or lump it, we're stuck with the legislation as it stands and it's my strong recommendation that all parties involved seek out ways and means to make the legislation work in their favour.
On 26 March 2025 at 8:50 am Backstage said:
I agree with David, and if financial institutions (suppliers/banks/insurers)have to pull their socks up and behave, then this is good.
The fear is that the financial institutions will feel the need to roll this downhill on advisers as if we are the problem. Their legal teams as always will, in an attempt to appear relevant, somehow make it sound like we are to be caught in this net and they must or will try to monitor us.
Suppliers overlook that it is not their job to monitor us, that is the FMA's role.
On 27 March 2025 at 12:59 pm Amused said:
Hi David & Backstage
Agree with much of what you have said above however I still believe wholeheartedly that we are going backwards not forwards with the introduction of CoFI law. As I mentioned most of the institutions CoFI is aimed at have conduct procedures in place already because they need to be licensed to conduct business. CoFI is simply an over duplication of these existing regulations expanded upon by overzealous civil servants in Wellington. As per the recent examples noted by David under existing law the FMA has already been able to take proceedings against institutions it believes have disadvantaged consumers. Why then do we need another law now introduced by Parliament?
Frankly it feels like CoFI has been allowed to become law by this Government, who were so vocally opposed to it when in opposition, for no other reason than it has advanced so far to date and all the affected institutions have spent massive sums of money now getting ready for its implementation not to mention the small forest that has likely given its life for all the paper that has been generated. I think I can even recall one National MP interviewed last year trying to rationalise the above for why his party has now done a complete 180 degree. National campaigned on removing unnecessary regulation before the last election but now they seem to be saying it’s simply too late to stop CoFI and they are also trusting again the advice of Wellington civil servants that financial advisers need to be captured by it. How many times does this country continue making the same mistake of listening to what senior public service officials believe is appropriate for industry? We all remember the disaster that was the CCCFA changes when they were first introduced and the subsequent impact on many credit worthy borrowers. We are still cleaning up the mess and no one at MBIE has ever been held accountable to taxpayers.
I would argue finally that more competition not more regulation incentivises better behaviour and conduct from institutions. The more regulation we add to industry in this country now the less likely we are to have new competitors entering the market. This fact was highlighted to the Commerce Commission recently during its enquiry into competition in the banking sector. New Zealand simply cannot afford to lose another HSBC type lender. HSBC sighted overregulation as one of the reasons why they elected to depart our shores.
On 27 March 2025 at 5:38 pm JPHale said:
I agree David.
@ Amused, we’ve had more competition in the past and frankly, the behaviour was worse not better.
The consolidation of companies into the more successful operators has generally improved the conduct in the market. The opposite to what you suggested.
Potentially due to less operators so individual activities are more visible.
The reality is we are a small market, there is a natural limit to provider numbers as the scale needed to be competitive impacts here. Which is why we need regulatory bodies to keep things in check.
Ideally we need more competitors but the population hurdle is part of the challenge. And CoFI needs to drop the duplication over FSLAA…
On 28 March 2025 at 9:51 am dcwhyte said:
Hi Amused,
You make some fair points on the over-regulation issue - perhaps the new Ministry with another cohort of tax-payer funded bureaucrats will address this -(sarcacsm or irony??).
And I take your point about FMA acting under existing legilsation to levy penalties on errant instos. However, I'm confident the regulator would prefer to forestall inappropriate conduct rather than to penalise same - prevention is better than cure, no?
Installing specifically targeted legislation sets the standards of conduct, and with the content of the FCP being delegated to licensees themselves, it seems to me banks, insurers, et al, have an ideal opportunity to improve their service delivery to all stakeholders - time will tell.
And His Majesty's Opposition of whichever hue, is prone to make all sorts of promises and statements when out of Government - it's what Opposition does - only to adjust their rhetoric and perspective on gaining power.
Ultimately, the lawmakers carry the can for poor legislation such as CCCFA. You might recall that the soon to be Deputy PM was a member of the Select Committee that approved CCCFA - but again, I'm sure that activity at the Ministry for Regulation will make sure nothing of this nature recurs.
Your point about Civil Servants having too much uninformed influence over Ministers is well made.
But that's the reality we have to deal with and change will only take place if Financial Advisers get organised behind a unified voice for advocacy on their behalf.
JP's point on market scale and consolidation is on the money as is his last sentence on duplication over FSLAA which in part, aligns with your sentiment also.
I doubt if either major political party has an appetite for repealing financial services industry legislation in its entirety. Against a backcloth of international developments, IMF reports and other benchmarks, NZ has been set on an irrevocable path to accept and adopt overseas trends and standards.
So we are where we are - still lobbying for sensible amendments and looking for ways to deal with the regulatory environment that improve our delivery of client expectations and aspirations.
Despite (or perhaps because of) recent experience, NZ Financial Advisers are a resilient lot, and the financial advice industry continues to make positive progress.
On 28 March 2025 at 10:01 am JPHale said:
@David agree. Ultimately, we have been destined to have this come in rather than scrapped as the international monetary crowd have deemed it necessary.
Which means that change is through amendment, but we have to have the damn thing in place to amend it. This means we're stuck with it until the slow-moving process of amendments ticks around to sort it, which may be another 10 years!
On 28 March 2025 at 2:34 pm Amused said:
Hi David,
All very good points you’ve made. I still believe personally that increased competition is the better way for New Zealand to encourage our institutions to behave nowadays especially when we are such a small country globally and our market doesn’t have the monetary appeal of other nations. This country desperately needs another four main bank lenders operating here. Unfortunately, new laws like CoFI give potential competitor banks pause now to entering the New Zealand market. That cannot be considered a good outcome for kiwi consumers.
It’s been my observation that Wellington civil servants seem to always sight “international best practice” when justifying new regulation added to industry in this country. Just because it’s been done overseas doesn’t make it automatically the right thing for New Zealand also. Some people might think that if organisations like the IMF are in favour of a new piece of regulation that it should be automatically “rubber stamped” but we always need to question any new regulation introduced in New Zealand and who is actually benefiting from it the most. If it’s not the consumer then why are we even introducing it in the first place? New Zealand is not America or Europe. We are a sovereign nation, and we need to be determining what regulation and laws best suit us. Is the regulation been added even “fit for purpose” for our particular market here?
As you can probably tell, I hold a very low opinion of public servant officials in Wellington. I’ve just seen too many examples over the years of them ignoring the industries they have been charged with reviewing/regulating. I think many of our politicians also unfortunately take what the public service says as gospel. New Zealand's main export used to be dairy. Now it seems to be overregulation and compliance courtesy of Wellington bureaucrats. It’s my opinion that this country is going nowhere until the government overhauls the Wellington public service. All these public servant officials seem to do now is disadvantage the consumer.
Yes, it’s always important to make sure we have the appropriate safeguards in place to ensure institutions are dissuaded from disadvantaging customers but that needs to be balanced against what impact these changes also have on the consumer themselves. Banks and insurers etc. have now had to hire more staff specifically to meet their new CoFI regulatory requirements and these costs will inevitably get past on to customers.
Perhaps indeed the new Ministry of Regulation with its new cohort of taxpayer funded bureaucrats will ultimately prove beneficial to combating some of the overregulation that has occurred in this country. The new climate related disclosure (CRD) requirement for the financial services industry (another example of the last Government adding unnecessary cost and complexity to business) would seem like something that needs some attention. Climate reporting is now a full-time job for some bank and insurance staff yet none of New Zealand's biggest climate polluters are associated with the financial services industry.
On 2 April 2025 at 4:59 pm dcwhyte said:
Amused - all in favour of competition, but financial services industry competition needs to be appropriately regulated. Unfettered competition in the industry has created some less than savoury practices over the years and CoFI provides the mechanism for Product Providers to meet standards as defined in the self-created Fair Conduct Programmes.
At one stage, FSC's predecessor had around 18 Life Companies as reporting members. There is no empirical evidence to suggest that industry rationalisation has resulted in adverse client outcomes due to a lack of competition. After all, we're in a territory with a population base about the same size as Greater Melbourne so I believe we have pretty good levels of competition at present - with the door open if any other entities fancy their chances.
NZ has been one of the last OECD countries to adopt financial services regulation and recognising the need to be a stable, albeit small, player in the international capital markets with acceptable legislative and regulatory frameworks has increased our viability without slavishly following the other territories.
While there are similarities, the NZ version of industry regulation is unique to us. The level of interaction and collaboration between industry and regulator simply does not exist elsewhere - long may that state of affairs continue.
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CoFI is just the latest example of overregulation adding unnecessary complexity to an industry which doesn’t need it. Inevitably the costs associated with these changes will get passed on to consumers. The only people who are benefiting from CoFI are the Wellington bureaucrats charged with administering it. Most of the institutions CoFI is aimed at have conduct procedures in place already because they need to be licensed to conduct business.
National had previously said it wanted to get the financial services industry working efficiently, quickly and appropriately. That is not what is being achieved now with CoFI.