By now, everyone associated with the financial services industry will have heard of the Conduct of Financial Institution legislation. This legislation is also known as CoFI. You’ll likely have seen various articles about it doing the rounds on LinkedIn. It’s been in the pipeline for a while and has gone through multiple readings in the House. It was passed in June 2022, and companies should now be preparing to apply for the licence.

Being in the Risk & Compliance recruitment space, we are seeing more and more companies seeking assistance from individuals with knowledge of CoFI. Just like when CCCFA was at its peak, every other Compliance role required CCCFA knowledge. We wrote an article last year on Buoyancy in the Risk and Compliance space. It talks about areas directly affected by regulatory changes.

So what is CoFI, and how did it come about? 

CoFI amends the FMCA 2013 by requiring banks, licensed insurers and licensed non-deposit takers to be licensed by the FMA. According to the FMA, it was designed to protect consumers by putting the consumer first. Particularly when it comes to decisions and actions made by the institutions. It has been introduced to ensure banks, non-bank deposit takers, and insurers comply with the fair conduct principle when providing consumer services.

The FMA states that Financial Institutions need to treat consumers fairly by following several principles, including:

  • Ensuring customers have the correct information to make informed decisions
  • Acting ethically, transparently and in good faith
  • Ensuring they pay genuine concern to the consumer’s interests
  • Ensuring that the services and products provided are meeting the requirements of likely consumers
  • Not subjecting consumers to unfair pressure or undue influence

The CoFI legislation was brought about due to the FMA and RBNZ carrying out a Conduct and Culture Review in 2018. The review ultimately found that New Zealand had weak points when it came to regulating the conduct of Financial Institutions. 

Now the CoFI legislation has been passed, what’s next?

The FMA is working with Financial Institutions to ensure they are prepared for CoFI. Licensing applications will begin opening in mid-2023. They will release a licence application guide in late 2022- early 2023 with information about how to make an application and interpret the questions. There is also a Fair Conduct Programme information sheet to be released in late 2022- early 2023. This will assist applicants with preparing for licensing by establishing their FCP. Although the regime commencement is not until early 2025, this is not an overnight process. Therefore, financial institution licence applications are expected to begin in mid-2023. This allows 18 months before the regime comes into effect.

Over the coming months, will see several articles, information sheets, and news outlets reporting on CoFI and any relevant updates. Whether you’re in the financial services industry or looking to make a move to the industry, you must keep up-to-date with this information. Especially for those who have been out of the industry for quite some time, become familiar with the changes and how they affect the industry.

If you would like a discussion about your next move or just a general chat about the market, I am happy to talk with you whether you’re looking at options elsewhere or just seeing what is out there. On the flip side, if you want to expand your team in 2022/2023, our team is well-placed to assist with your growth plans. Please contact our Risk and Compliance team for a chat or coffee.We have also released our annual Risk & Compliance salary guide, which you can download a copy of here.