This month’s newsletter features stories on tackling misleading disclosure by wholesale issuers, operational resilience obligations and a check in, as well as an update on our MOU with the UK.
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FMA Update
30 October 2025
Tackling misleading disclosure by wholesale issuers a priority
Tackling misleading disclosure by wholesale issuers is a priority for the FMA, as detailed in our Financial Conduct Report, which outlines our regulatory priorities for the financial year.
We sought guidance from the High Court to confirm the correct interpretation of the eligible investor exclusion – specifically regarding how eligible investor certificates are used, confirmed, and accepted in the wholesale investment sector.
In September, we welcomed the clarity provided by a High Court ruling.
FMA Executive Director for Response and Enforcement Louise Unger says, “We appreciate the clarity on how the law should be interpreted. We remain committed to ensuring confident participation in wholesale markets by offerors and eligible investors, including by enforcing fair dealing in wholesale offers. We are focused on encouraging positive behavioural change among participants.
“There has been an increase in complaints and concerns raised with the FMA about wholesale offers of financial products. Several complaints led to an inquiry and ultimately a warning to HP Capital Limited, trading as Finbase, earlier this month,” says Louise.
Operational Resilience update
Operational resilience obligations for CoFI licensed financial institutions
As part of their CoFI licence obligations, financial institutions have a legal obligation to comply with a set of standard conditions. Two of these – Standard Condition 4 and Standard Condition 5 – are critical to operational resilience.
Standard Condition 4 relates to outsourcing and Standard Condition 5 is focused on business continuity and technology systems.
Operational resilience check in
Our Operational Resilience team is undertaking a significant survey looking at the operational resilience of licensed market service providers.
Acting team manager Jocelyn McKernan explains, “One of the priorities, outlined in our Financial Conduct Report for 2025/26, is to deepen our understanding of operational resilience practices across licensed market service providers, including related risks and harms.
“To support that, we are asking firms a series of questions on their governance, outsourcing arrangements, incident management, business continuity plans, technology systems, information security, and mandatory notification practices.
Milestone in international regulatory cooperation
The Memorandum of Understanding on Reciprocal Arrangements (MOURA) between the FMA and the United Kingdom’s Financial Reporting Council (FRC) marked its two-year anniversary last month.
The agreement enables eligible auditors in both countries to gain recognition and audit rights in the other jurisdiction, supporting professional mobility and strengthening audit market resilience.
Since its signing in September 2023, approximately 20 auditors have successfully used the pathway to practice in New Zealand. United Kingdom statutory auditors and New Zealand licensed auditors can apply to practice immediately, while New Zealand-qualified members of CA ANZ or CPA Australia residing in the United Kingdom must complete a two-year adaptation period.
FMA Head of Audit, Financial Reporting and Climate Related Disclosures Jacco Moison says, “The agreement provides opportunities for auditors from both countries to contribute and broaden knowledge and experience across borders.”
Ethical investing disclosure guidance
Last month we opened consultation on our draft guidance for financial products with ethical characteristics. The updated guidance will help issuers consider how they present ethical claims about their products in disclosures and advertising.
It’s not too late to share your feedback. We want to hear from industry participants about whether our guidance is useful and will help them be clearer in their disclosure practices.
Please send your submission to consultation@fma.govt.nz by 5pm Friday 7 November 2025.
Guidance on reasonable grounds for financial advice
We continue to seek feedback on our Reasonable grounds for financial advice about financial products guidance.
This guidance was released in response to the Growing New Zealand’s Capital Markets 2029 Report. It explains our approach to applying and enforcing Code Standard 3 of the Code of Professional Conduct for Financial Advice Services, as it relates to financial advice on financial products purchased for investment purposes, such as listed shares.
We welcome your comments on how the guidance has been operating and any barriers to growing our capital markets.
Please send your comments to consultation@fma.govt.nz by 5pm Thursday 13 November 2025. You can also get in touch with us if you would like to arrange a time to discuss your feedback before then.
We will carefully review all feedback and may consult further if changes to the guidance are likely.
Regulation of custody of client assets
We are reviewing the regulatory settings for custody of client assets in New Zealand. Our aim is to identify any risks, issues and areas for improvement, and explore options to strengthen regulatory protections for custody of client assets. Robust client asset protection promotes confidence in our regulatory environment and growth of capital markets.
We welcome your insights on this topic. We are particularly interested in views on:
What is working well in the current regulatory framework for custody of client assets in New Zealand?
What areas may need improvement?
What are the key risks and issues where client assets and money are held in custody in New Zealand, and why?
Are any changes needed to strengthen protections for assets in custody or to address the risks, issues or areas of improvement you identified?
Please send responses to consultation@fma.govt.nz by 5pm Thursday 27 November 2025. You can also get in touch with us if you would like to arrange a time during November to discuss.
Your insights will inform our approach and planned development of a discussion document on this topic. There will be further opportunities to provide feedback once the discussion document is published.
Update on review of 14 FMC Act class exemption notices
In May 2025 we consulted on 14 FMC Act class exemption notices that will expire in 2025 and 2026. We have decided to grant continued exemption relief in relation to the first tranche of notices:
Financial Markets Conduct (Requirement to include Climate Statements in Annual Report) Exemption Notice 2023
Financial Markets Conduct (Australian Licensees) Exemption Notice 2020.
Financial Markets Law Conference
FMA’s Head of Deposit Taking Margie McCrone gave a keynote speech at the Financial Markets Law Conference this month, outlining many aspects of FMA’s current work programme.
The conference was opened by Commerce and Consumer Affairs Minister Scott Simpson and was attended by a range of industry participants.
Margie covered a number of areas in her speech, including the Financial Conduct Report and the recent complaints information sheet.
FMA’s Director of Deposit Taking, Insurance and Advice Michael Hewes then joined Margie in a panel discussion, which included topics like the use of artificial intelligence in financial services and FMA’s engagement programme with industry.
AI Governance: Accelerate Financial Services with Trust
FMA Executive Director of Transformation and Operational Delivery Kari Jones joined a Deloitte panel for a timely discussion on navigating the evolving AI landscape.
“As financial institutions accelerate AI adoption, the challenge for banks lies in calibrating model risk management to keep pace with innovation while safeguarding trust and stability,” says Kari. “It was good to talk about such an important topic in a room full of chief risk officers and risk managers, model risk management professionals, and compliance and risk governance teams.”
Innovation Round table
Our Chief Executive Samantha Barrass and Executive Director of Evaluation and Oversight Liam Mason were joined by fintech leaders, entrepreneurs, and industry representatives for the FMA’s inaugural Innovation Roundtable in Auckland.
The kōrero was future- and outcomes-focused, exploring how the FMA can better support and champion emerging fintechs as they design and scale new products that could drive innovation and contribute to New Zealand’s economic growth.
Former financial adviser sentenced for “gross breach of trust”
In September Murray McClune, a former financial adviser, was sentenced to three years and seven months’ imprisonment for two charges of theft by person in a special relationship, following an investigation by the FMA.
The judge also permanently banned Mr McClune from holding directorships and management positions, and from providing financial advice and client money and property services which Mr McClune did not oppose. No reparation order was made because the judge considered to do so would be futile.
Mr McClune’s sentence arises out of his theft of approximately $1.7m from elderly clients over the course of two years starting in 2016.
Following the sentencing, FMA Head of Enforcement Margot Gatland said Mr McClune had committed serious offences. “His conduct was both deliberate and dishonest, and involved a gross breach of trust. The conduct arose in the course of his role as a financial adviser, a position he used to take advantage of his clients.
“Banning Mr McClune ensures protection of the public and deters others from committing breaches.”
IAG to make pecuniary penalty payment of $19.5 million for widespread failures
Insurance company IAG New Zealand Limited admitted to fair dealing breaches earlier this month, and the Court has imposed a final pecuniary penalty of $19,500,000.
Following our investigation, IAG admitted making false and/or misleading representations in relation to its insurance products.
Following the Court’s judgment, FMA Executive Director, Response and Enforcement Louise Unger said, “The nature and scale of IAG’s contraventions was greater than those present in any other fair dealing case the FMA has to date taken to Court, and the judgment confirms they warrant a significant penalty.
Meet the team – Investigations
Our Response and Enforcement function is made up of the teams that assess and address conduct that poses serious harm to New Zealanders, as well as our specialist supervision teams, which supervise, monitor and deal with conduct related to regulatory obligations that apply across multiple sectors. We are introducing these teams, sharing more about the work they do as well as the impact they hope their work will have.
This month we are introducing the Investigations team, which conducts formal investigations into cases referred from the Perimeter and Response or supervisory teams where there is a suspicion of very serious misconduct. Its remit is broad and it is guided by the regulatory outcomes set out in our Financial Conduct Report.
Within the team there is a wide range and depth of expertise including experience in investigations, forensic accounting and conduct regulation.
If you have any questions about their work you can email questions@fma.govt.nz.
Pump and dump scam nets Kiwi investors
Kiwi investors are being caught by a ‘pump and dump’ scam.
A pump and dump occurs when a person buys shares in a company and starts an organised campaign to increase (or 'pump') the share price. They then sell (or 'dump') their shares and make a profit, while the other shareholders suffer financial losses as the share price falls.
FMA Director of Markets, Investors and Reporting John Horner says this current scam uses social media advertisements featuring an impersonated business leader, encouraging investors to join a fake investor chat group.
“We first raised our concerns about the impersonations in a public warning in August and have received further information showing this is part of a global network of scams aimed at market manipulation.”
For more information see the media release on our website.
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