Kia ora - thank you for having me here today.
Firstly, I’d like to acknowledge all the members of the Financial Planning Standards Board who have travelled some great distances to be here today.
I hope you get a lot out of the summit, meet some old friends and make some new ones, as well as taking the opportunity to explore our beautiful part of the world.
Hosting the inaugural Financial Advice New Zealand Policy Summit in conjunction with the Financial Planning Standards Board Asia Pacific Forum is a huge undertaking, so I’d like to congratulate Nick Hakes and his team for all the work that has gone into pulling this event together.
I really value the opportunity to both listen and speak to the profession at these events. Most recently I spoke at the FANZ annual conference in March, where some of you might remember the FMA launched our Access to Advice report.
To provide some context for our international guests, we commissioned the Access to Advice review following some regulatory reforms in New Zealand, which were designed to lift standards of conduct across the financial advice sector and help ensure that quality financial advice remains available and accessible to those who need it.
Three years into the new regulatory regime, it was important for us to better understand the availability of financial advice in New Zealand and where consumers go to seek out advice. As part of the review, we published terms of reference, interviewed almost 80 stakeholders, conducted a consumer survey, and published our findings in the Access to Advice report. That report highlighted only 28 per cent of Kiwis received some kind of financial advice over the course of a year.
This was and is a concern for us. Financial advisers help support New Zealand consumers to understand risk, choose the right financial products and build and diversify their investments. Ultimately, at the heart of financial advice as you know is improving a client’s overall financial wellbeing.
The report also aimed to start a conversation about some opportunities and challenges for the financial advice sector.
These included the chance to make the most of the flexibility offered by the way financial advice is regulated in New Zealand, and open the door to innovation, new ideas and helping make advice available and accessible to those who do not normally use it.
We want to help everyone get more comfortable with making the most of the flexibility available by working together with professional bodies like FANZ, other regulators as well as the wider sector.
A great example of this collaboration includes the FMA working with FANZ, to provide feedback on their first Common Practice Standard draft on around determining the nature and scope of advice, which highlights ways to make the most of the regime’s flexibility, while still providing consumers with quality financial advice.
I want to strongly emphasise that we acknowledge a flexible regime may create some worries about what you can and can’t do. We want you to make use of this to support innovation in your advice and commit to helping the sector to get up to speed quickly by working closely with professional bodies. Ultimately, greater access to advice supports the FMA’s broader purpose of fostering the fairest financial sector in the world for all New Zealanders. I’ll talk more about flexibility of the regime later in my presentation, including some case studies the FMA is developing.
Our report also highlighted an advice gap around helping older New Zealanders decumulate their retirement savings wisely.
We’ve been engaging closely with the sector on the report’s findings over the last three months and I’ll talk about some developments in the Access to Advice space shortly.
However, I couldn’t pass up the opportunity to also discuss another very significant report we’ve released recently – the Financial Conduct Report.
It is the second time the FMA has published the FCR, which outlines our priorities for the sectors we regulate. The report also gives us the opportunity to highlight the impact of our activities over the past year.
FCR achievements
So, what how we done that I’m proud of?
- The FMA has put a big focus on deterring fraudulent activity in financial services. Work by teams across the FMA and other entities has led to 61 charges being laid against six people involved in mortgage fraud, which are currently before the courts. I’ll talk more about what we’re noticing in this space later in my presentation.
- We’re continuing to work with local industry and our international counterparts to disrupt scams that seek to fleece vulnerable people out of thousands of dollars.
- A great example of successful collaboration came to fruition last year when we worked with the National Reserve Bank of Tonga to highlight a Ponzi-style investment scam using multi-level marketing-type recruitment tactics. We raised awareness and disrupted the scam both in Tonga and with the Tongan community in New Zealand.
- Finally, we’re also really pleased with the results from our successful regulatory sandbox pilot. This has helped a number of innovative financial services products make their way to market. The sandbox has also helped develop our plans for a provisional on-ramp licence for innovative firms.
2026/2027 Focus
Looking ahead to our regulatory priorities for this year, I will focus on several which affect multiple industries, including the financial advice sector.
One area which I know will be of interest to many of you is how we manage conflicts from remuneration structures, which affects both our work on Consumer Credit, as well as Financial Advice.
First, let me be clear – the FMA is not opposed to commission, nor leading a review on the level of commissions. It is one of several legitimate forms of remuneration in these sectors. Our focus is on how conflicts are managed, which is a regulatory requirement.
We have a clear view about the behaviours we don’t want to see, motivated by commissions-based remuneration. This includes pressure selling, churn, poor or misleading advice, and fraudulent activity.
We expect intermediaries the FMA regulates, like financial advisers, to have controls to prevent and detect such behaviours. We are also interested in what is set out in product provider agreements. For example, we have concerns that people who aren’t directly regulated by the FMA, such as intermediaries like car dealers, are getting their reward from providers too early.
It’s up to product providers to ensure that products such as loans or insurance offered by these third parties are fair, affordable and beneficial for the consumer buying it. This is a responsibility we will be continuing to monitor under the Conduct of Financial Institutions Act.
We have also seen situations where there is a disconnect between commissions and the servicing expected over the lifetime of a product.
KiwiSaver trails are an example of this. While advisers might be receiving annual payments, are they providing ongoing check-ins with the client about whether they are in the right fund? As KiwiSaver contributions rise, and fund balances mature, the value for consumers in getting good financial advice on KiwiSaver is only going to rise.
So, what can advisers do to ensure they’re doing the right thing in this space?
Make sure you have effective processes and controls in place to manage conflicts linked to commissions. This includes detecting and preventing poor behaviour in the adviser workforce. This should include monitoring governance, business models, and how relationships with product providers may influence conduct.
We also want to make sure consumers understand what they will be receiving from ongoing services. This also needs to be clearly explained to them in the information they’re receiving.
Complaints
Another priority that covers many of the sectors we regulate is complaints.
We get and understand that complaints aren’t always welcome. But it is also a major opportunity to understand the processes that need to improve and ongoing trends.
Our monitoring shows there are still gaps in how financial advisers identify and record complaints and then use that information to drive improvements.
We’re using the FMA’s current series of financial advice provider forums, where we speak with advisers up and down around the country, and business-as-usual engagements with the sector to help relay our expectations on using complaints data as a treasure trove of insights to continuously improve advice services.
While much of our work is engagement-focused, there are times when we need to use our regulatory tools to deter illegal behaviour, like when we become aware of fraudulent activity.
Fraud
An area where we’ve seen a fair bit of public interest recently is our work around mortgage fraud. There’s been a significant lift there, including active cases before the courts.
We also last year wrote to major lenders to highlight red flags that we were seeing in mortgage fraud cases. In the years up to 2023, we received around 1 complaint a year about mortgage fraud. In 2024, that went up to 7. In 2025, that went up to 21. It’s an area where we will continue to focus, not least because of the impact on both lenders but also the borrowers, who are often the victims at the heart of these cases.
The Financial Conduct Report also calls out interest in the fraudulent use of KiwiSaver funds for a first home withdrawal. These include false claims that eligibility criteria are being met or funds are not being used for a first-home purchase.
So, what are our plans for working with the sector to combat fraud over the next 12 months?
We will continue to support licensed financial advice providers to uplift their controls to detect and respond to fraud, along with sharing our own insights to help them identify potential fraud earlier.
Along with providing support to the sector, we will continue to hold those engaging in fraudulent behaviour to account by using our full suite of regulatory tools. It remains a key priority for the FMA to respond quickly when these matters are reported to us.
Artificial Intelligence and Technology
One of the major pieces of work that came out of our Access to Advice report and features as priority in the FCR is digitisation and innovation in financial advice, including the use of artificial intelligence.
Since the Access to Advice report launched in March, we’ve started connecting with the fintech and financial advice sectors to carry out a thematic review into the use of AI in financial advice. This will help us understand current practices, risks, opportunities and safeguards.
We’ve also been talking to our international counterparts, including the Financial Conduct Authority in the UK, to share learnings in this quickly developing area.
A key area for both organisations is the need to engage effectively with industry to ensure we have a clear view of what’s happening in the market, so we’re working in collaboration.
I’d also like to recognise the Financial Planning Standards Board’s practice guidance note on AI use released last month, which helpfully points out that financial planning professionals should approach AI as a tool to enhance – not replace – professional expertise.
Using AI as a tool to enhance professional expertise is also an opinion reflected by New Zealanders in our consumer research.
It showed that more than 80 per cent of people still want to work with a human, but there are opportunities to leverage AI, offering the potential to simplify administration tasks so advisers can spend more time with clients, for example.
There is also the opportunity to better understand how technology can be used to reach underserved consumers, while maintaining strong governance and consumer protection.
Principles-based regime
One of the topics from the Access to Advice report that we’ve been talking to financial advisers about the most is the flexibility of our principles-based regulatory regime.
As I mentioned earlier, this gives advisers the opportunity to right-size advice depending on what their clients’ needs are.
The FMA is playing our part here by developing some case studies (as promised in our Access to Advice Review). These case studies are to give examples of how the regime can be applied well to address accessibility challenges. Areas we are seeking to explore is giving advice at scale, single-issue advice, giving advice on more straightforward financial products, and advice given for the decumulation of hard-earned retirement savings.
We are still engaging with the sector on these case studies and will start publishing them later this year. A series of roundtables and meetings are planned to progress this work. This work fits well with FANZ’s standards rollout I mentioned earlier and ensures we are connected rather than working in silos.
Of course, the regulator and professional bodies can’t do all of this work on our own.
We encourage the sector to innovate – and if you have any questions or concerns or want to participate in the events to help develop the case studies, please talk to us or FANZ.
For New Zealand, our legislative regime continues to offer advisers flexibility to offer advice at different degrees and scope, to cater to different types of consumers, channels and circumstances. This is an opportunity for firms of all sizes, big and small, multidisciplinary or specialised.
That flexibility can make advice cheaper, and easier to deliver, while still being compliant and offering adequate consumer protection.
Retirement planning
I want to begin to wrap up my remarks with something I mentioned right at the beginning of my presentation – decumulation – or helping average New Zealanders decide how to spend their retirement savings wisely.
The report highlights that there is a significant gap here, with many advisers not offering this kind of service.
While KiwiSaver is the main way many Kiwis save for retirement, advisers also need to think about the bigger picture, which includes other investments people have, proceeds from house sales and other forms of income.
However, this opportunity for the industry also requires in-depth knowledge, competence and skill so peoples’ retirement savings are safeguarded.
With KiwiSaver close to completing two decades of growth, demand for this is only going to rise for the foreseeable future.
This is a challenge for the sector and industry bodies like FANZ to offer some professional development opportunities to help upskill those keen to help Kiwis make their retirement savings last.
An opportunity
When I spoke at the start, I talked about the real value I took from events like this not just for the opportunity to speak about the FMA’s work, but also to listen and engage with the
sector.
I do really see an opportunity for the FMA and the financial advice industry to work together to tackle the issue of access to advice. Following the release of the Access to Advice report, I already feel like conversations and discussions are happening that six months to a year ago, simply wouldn’t have been taking place.
Please keep this mood and dialogue going. We see a real opportunity emerging to deliver financial advice to more New Zealanders. Thank you again for having me speak. Nick, I believe you’ve got a few questions?
