In his inaugural address to the financial services sector at the FSC’s Outlook 2024 conference, the Minister of Commerce and Consumer Affairs Andrew Bayly said he wanted to see a targeted reform of CoFI requirements.
He will also ask the FMA to provide clear guidance for smaller institutions on how they could meet the minimum requirements of conduct.
Bayly told a sold-out audience at the Auckland event on Wednesday 31 January that a reform of the Financial Markets (Conduct of Institutions) Amendment Act 2022, would ensure that good conduct obligations that “..are proportionate and fit-for-purpose”.
He told the 400 attendees that this includes two aspects:
- Reinforcing the principle that the responsibility for determining what is an appropriate fair conduct programme for their specific business lies with the applicant
- Requesting the FMA issue clear guidance for smaller institutions to meet minimum requirements of conduct
Bayley said that to put this second aspect into context, he believes it essential all financial institutions have in place fair conduct programmes that cover the following aspects of their businesses:
- How they engage appropriately with their clients and customers
- How they develop new policies and products to be fit for purpose and meet regulatory requirements
- Establishing transparent fee structures and charging arrangements particularly with intermediaries
- Development of an adequate complaints processes
He said while a fair conduct programme might look different for a firm with 200 customers compared to a bank with two million customers “…the importance of fair treatment remains the same”.
…these changes are not about lessening requirements for appropriate conduct…
“Let me be very clear – these changes are not about lessening requirements for appropriate conduct,” he said. “It’s about ensuring that financial institutions have clear guidance from the FMA, and take responsibility to meet your obligations more effectively without compromising on conduct standards.”
Bayly said he realised many companies had already begun preparing fair conduct programmes in time for the 31 March 2025 deadline.
“You need to continue to do so. I intend to ensure that appropriate timelines and transitional arrangements are in place to avoid any issues of uncertainty, which will include ‘grandfathering’ of all CoFI licences into a single conduct licence in time.”
Bayly also plans to look at insurance contract law “…so that insurers and policyholders have better certainty about the deals they’re striking”.