Understanding the Conduct of Financial Institutions Amendment Act

This document is a guide that outlines the Financial Markets (Conduct of Financial Institutions) Amendment Act (CoFI), which was passed by the Government on 29 June 2022. The Act introduces a new legislative framework aimed at regulating the conduct of financial institutions and their intermediaries in New Zealand. It addresses concerns raised by the Reserve Bank of New Zealand and the Financial Markets Authority regarding conduct and culture in retail banks and insurers. The key aspects of the CoFI regime include promoting good conduct and culture, establishing duties and obligations for financial institutions, and requiring licensing by the FMA. The document details the expected improvements in conduct risk management and customer outcomes, emphasizing the importance of treating customers fairly. It also discusses the penalties for breaches of the CoFI regime, which can include fines, enforcement actions, and reputational damage. The guide concludes with recommendations for organizations to prepare for compliance with CoFI by implementing necessary changes and strategies.