FMA provides additional support to smaller firms for CoFI licensing

The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has today published an information sheet specifically for smaller firms to assist in establishing and maintaining a Fair Conduct Programme (FCP) and applying for a Financial Institution (CoFI) licence.

The sheet provides information and examples to help smaller firms establish, implement and maintain their FCP. Financial institutions are required to have an FCP that is designed to ensure their compliance with the fair conduct principle, as set out in the Financial Markets (Conduct of Institutions) Amendment Act 2022.

The fair conduct principle is the overarching principle of CoFI that a financial institution must treat consumers fairly. The CoFI regime is designed to protect consumers by putting them at the forefront of institutions’ decisions and actions. CoFI is principles-based and the requirements for FCPs have been designed to enable and accommodate a wide variety of financial institutions to design and implement processes and controls in their business that work to ensure that consumers they deal with are treated fairly.

The information sheet is the latest piece of support from the FMA to help smaller firms prepare for the new regime when it comes into effect in March 2025. The FMA continues to take a supportive and educative approach to implementing and transitioning firms into the new CoFI regime, as it has shown with the Financial Advice regime and the new Climate Related Disclosure regime.

The FMA has held numerous market engagements to help firms understand what obligations and requirements they must meet under the new legislation. This includes two webinars with approximately 150 people in attendance. Forty firms provided feedback on how the FMA can best support them following recent engagement. FMA staff have held 11 one-on-one clinics with smaller firms, while 20 other firms have expressed interest in a one-on-one session. The FMA will continue to provide ongoing support to firms through the application process.

FMA Executive Director of Regulatory Delivery Clare Bolingford said: “We have some great examples of working with a diverse range and size of businesses from the financial advice sector while we implemented the new advice regime. CoFI is also principles-based and therefore we won’t be taking a ‘one size fits all’ approach to the way that firms meet the minimum requirements. Each firm’s Fair Conduct Programme needs to be the proportionate to the nature, size and complexity of its business. We expect smaller firms will need a less complex FCP compared to bigger financial institutions. We also expect firms to review and evolve their FCPs over time. FCPs do not need to be fully implemented until the regime comes into force.

“I encourage all small firms to read the information sheet and attend our CoFI workshops. The FMA is here to support firms on their journey. It is also a timely reminder for all firms to get their licence applications in well in advance of the March 2025 deadline for obtaining a licence.”

CoFI information sheet for smaller firms [PDF] 279KB

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