The Financial Markets Authority (FMA) released its first Financial Conduct Report (FCR), outlining its regulatory priorities for the 2025/26 year across New Zealand’s financial services sectors. The FCR outlines specific actions the FMA will take to address conduct risks and opportunities, directly aligning with the outcomes-focused regulatory framework introduced earlier this year. This new report reinforces the FMA’s commitment to fostering fair, efficient, and transparent financial markets by aligning regulatory actions with desired outcomes for consumers and industry participants.
The full FCR can be found here and the outcomes-focused regulation document released in March this year can be found here.
Who needs to read it? Why?
The FCR is relevant to all sectors and businesses regulated by the FMA, as it outlines regulatory priorities across the five key sectors – financial advice, banking and non-bank deposit takers, insurance, capital markets, and investment management. It also highlights cross-sector priorities that all regulated entities are encouraged to consider alongside their sector-specific focus areas. The FMA urges boards, executives, and senior leaders to use the FCR to understand its expectations for the year ahead and to reflect on how the insights can support better outcomes for consumers and markets. The report includes clear takeaways tailored for boards, CEOs, and senior executives in each sector.
What does it cover?
The FCR outlines the following priorities for 2025/26 for each sector:
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Sector |
Priorities |
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Cross-sector |
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Financial advice |
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Banks and non-bank deposit takers |
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Insurers |
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Capital markets |
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Investment management |
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In the FCR, the FMA outlines its strategic intentions for the upcoming year, detailing how it plans to implement its priorities. These priorities are aligned with the seven outcomes identified in its ‘outcome-focused regulation’ framework. To achieve these outcomes, the FMA has proposed several key actions, including:
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Outcome |
Proposed steps |
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Fair services |
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Ongoing quality services |
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Market innovation and growth |
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Market integrity and transparency |
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Well-informed consumers and investors |
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Improved access to products and services |
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Resilient markets and providers |
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Our view
We welcome the transparency and clarity that the FCR brings to the financial services industry. This first report marks a significant step forward in fostering open dialogue between the regulator and the industry.
The FCR’s structure, which is heavily linked to the FMA’s outcomes-focussed approach, shows that the FMA is actively implementing targeted initiatives to improve conduct and outcomes across the sector.
The “Key takeaways” sections for Boards, CEOs, and senior executives are posed as questions, rather than statements as to what the FMA is doing. These sections may serve as a helpful prompt for leadership teams to reflect on their own businesses conduct and risk frameworks in light of the FMA’s expectations. However, at times they remain so high-level that directors and C-suite executives will need to do more to ensure their business is well-positioned to respond to the FMA’s priorities.
Given the report’s broad cross-sector scope, it is no surprise that different commentators in the last 24 hours are focusing on different areas. For us, the following areas stood out:
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Wholesale market conduct: The FMA’s increased attention to wholesale investment activity is timely. The report highlights concerns around the misuse of wholesale investor exemptions, particularly where retail-like products are being offered without adequate disclosure or oversight. This signals a shift toward greater scrutiny of conduct in wholesale markets, especially where investor protections may be undermined. It is also consistent with the approach of the FMA in bringing its case stated application for greater clarity around the use of eligible investor certificates.
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Effective protection of client assets: The FCR highlights FMA concerns around inadequate regulation of custodial arrangements and the potential for investor loss where client assets are not properly segregated or safeguarded. While no sweeping custodial reforms were announced yet, the FMA has acknowledged that New Zealand has a comparatively weak regime for custody, and is actively engaging with MBIE to explore potential reforms. This signals that we can expect future developments aimed at strengthening custodial oversight and investor protections in the coming year.
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Disclosure reform: The FCR outlines plans to work with industry on simplifying disclosure documents and ensuring they are genuinely useful to consumers. This is specifically called out in the FCR in relation to ethical investment disclosure, which the FMA reinforces is of increasing importance to investors, and states that it intends to publish further guidance in this area and continue to act where they find disclosures or claims to be materially misleading, deceptive or unsubstantiated.
Looking ahead, we anticipate that future reports will place greater emphasis on digital assets and financial innovation, particularly as the FMA continues to engage with emerging technologies and business models through initiatives like its regulatory sandbox. As tokenisation, virtual asset service providers, and digital custody solutions continue to progress, we expect the FMA to provide more detailed guidance and oversight in these areas. Additionally, the expansion of the regulatory perimeter, a theme only lightly touched on in the current report, is likely to become more prominent. This will be critical for ensuring that regulatory protections keep up with innovation in the fintech space, and that consumers and markets remain adequately protected.
What next?
If you have any questions in relation to the FCR or want further information on the intentions of the FMA and how this will affect your business, please contact one of our experts.
This article was co-authored by Olivia Maher (Law Clerk) from our Financial Services team.
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