CoFI Regime Now In Effect
The Conduct of Financial Institutions (CoFI) regime comes into full effect today, with the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - expecting banks, insurers and non-bank deposit takers to put New Zealand consumers at the forefront of their decisions and actions.
FMA Director of Deposit Taking, Insurance and Advice, Michael Hewes, says: “CoFI is fundamentally about treating customers and potential customers fairly - this is the fair conduct principle. We expect financial institutions to be analysing how their products are performing, communicating effectively with consumers and acting quickly if something is not working as it should be.”
As part of their licensing requirements, financial institutions are required to establish, implement, and maintain a fair conduct programme.The programme needs to be designed in a way that ensures their compliance with the fair conduct principle, and they need to display summary information about it on their website so consumers can understand how their chosen provider should be treating them.
The FMA’s supervision of financial institutions under CoFI will use the full spectrum of tools available to it, including engagement meetings, monitoring reviews, and thematic reviews looking at key issues across the sector.In line with our outcomes-focused approach as a regulator and the principles-based nature of the CoFI regime, our focus will be on theoutcomeof financial institutions treating consumers fairly, while giving firms flexibility, where appropriate, withhowthey achieve this.
Advertisement - scroll to continue reading“We want to thank the financial institutions for their efforts in getting licensed by 31 March. In total, 77 have been licensed by the FMA - 17 banks, 46 insurers and 14 non-bank deposit takers (credit unions, building societies and some finance companies). We have been working closely with them throughout the process and will continue to listen, provide guidance, and communicate our expectations.”
“New Zealanders should have access to the financial products and services they need, when they need them, and have trust and confidence that products and services will perform as expected and meet their needs. We expect CoFI to achieve that.”
Notes:
In 2018 and 2019, the FMA and Reserve Bank of New Zealand undertook joint reviews into the conduct and culture of banks and life insurers. The FMA also undertook a conduct ad culture review of fire and general insurers. The reviews also led to the introduction of the Financial Markets (Conduct of Institutions) Amendment Act 2022.
Financial institutions were asked to report on any issues requiring remediation, and this update reflects the continuing efforts to review their practices and systems. Since the reviews, more than $215 million has been returned to over 1.5 million customers from discounts never applied or overcharged fees.
CoFI also significantly expands the FMA’s mandate as a conduct regulator to include financial institutions, and gives new responsibilities in terms of licensing, monitoring and enforcement.