28 August 2025

Shadow insider trading expectations published 

Louise Unger, Executive Director of Response and Enforcement 

We have published a report this week looking at "shadow insider trading", which outlines our expectations of those in possession of non-public material information.  

Shadow insider trading broadly refers to using material information about one listed issuer to inform trading in the quoted financial products of another listed issuer, where the two listed issuers are connected in some way that means information about one may have a material effect on the other’s share price.

We understand from market participants that shadow insider trading is common industry practice. This report is intended to educate market participants about the behaviour and standards we expect from those we regulate.

It confirms the position that trading decisions made with the benefit of non-public material information - regardless of whether the trade involves the issuer to whom the information directly relates - may still fall within the scope of insider trading prohibitions.

“We expect individuals and institutions in possession of non-public material information to carefully assess the potential implications of their trading activity across all related quoted financial products,” said FMA Executive Director of Response and Enforcement Louise Unger.

“This is a reminder to all those trading to be vigilant in documenting and reviewing trade rationales, particularly when they involve significant transactions outside of normal trading patterns or coincide with known market-moving events.”  

Some firms may consider that our view on shadow insider trading poses practical difficulties for intermediaries. We value constructive discussion on this issue and encourage those who would like to discuss it further contact us at questions@fma.govt.nz.  

We will be publishing the following consultations over the coming month. Check the FMA's consultation page for updates.

Tokenisation

We are publishing a discussion document looking at the current and future potential of tokenisation in New Zealand’s financial markets.

We want to gather insights into market barriers and opportunities for tokenisation in New Zealand’s domestic markets, to explore whether regulatory settings are helping or hindering responsible innovation, and to gather views on what the FMA could do to support innovation, improve regulatory certainty, and enhance consumer protection.

We plan to use insights to inform our regulatory approach and depending on market feedback, may make law reform recommendations to the Government.

We will be seeking your views and feedback over an 8-week period.

Ethical investing

Issuers of financial products are increasingly applying an ethical lens to their investment decisions, in response to demand from investors who are interested in ensuring that their investments are aligned with their values.

We are publicly consulting from early September on proposed guidance for issuers of financial products that incorporate ethical characteristics.  This guidance intends to provide information to issuers adopting ethical investment practices about how they can clearly disclose the basis for those practices, and how they are going to substantiate their claims.  

The guidance should help issuers prevent "greenwashing" in their disclosure, and improve the confidence of those participating in the ethical finance markets. It is intended to be practical, with examples of practices that we consider fall short of the statutory obligations for fair dealing and product disclosure, as well as examples of good practice we have seen.  

Possible recognition of other mandatory climate-related disclosure regimes

As mandatory climate reporting regimes continue to emerge globally, overseas-incorporated climate reporting entities doing business in New Zealand may incur increased compliance costs from having to meet multiple, often overlapping, reporting and assurance obligations across jurisdictions.

A similar problem previously existed with financial reporting and the FMA has had exemption relief in place for several years for overseas entities to reduce their compliance burden and promote flexibility for financial reporting in New Zealand.

For climate reporting, we will be consulting on options for a possible class exemption to reduce the compliance burden and promote flexibility for overseas entities, such as foreign listed issuers and branches of overseas banks and insurers, which must do climate reporting in New Zealand and overseas.

Clare Bolingford, FMA Executive Director of Licensing and Conduct Supervision

The road ahead for financial services regulation 

Clare Bolingford, FMA Executive Director of Licensing and Conduct Supervision, joined sector leaders earlier this month to explore the future of financial regulation in New Zealand at the Future of Financial Services conference in Auckland.

Her speech emphasised that conduct regulation works best when it learns from the past, but also looks ahead to future risks and opportunities. To build a financial services sector that New Zealand investors and consumers can trust, we must work together across regulators, government and industry.

Key themes included:

• Supporting digitisation, innovation and growth
• Tackling systemic issues through collaboration
• Embracing responsible use of AI and emerging technologies
• Evolving regulatory approaches to enable better outcomes

Margot Gatland, Head of Enforcement (L) and Louise Unger, FMA Executive Director of Response and Enforcement 

Sharing our response and enforcement work

How does the FMA assess misconduct and make its regulatory response decisions?

Earlier this week, Louise Unger, Executive Director of Response and Enforcement and Margot Gatland, Head of Enforcement presented at a “Meet the regulator” session, held by law firm Simpson Grierson in Auckland.  

They gave an overview of the Response and Enforcement Function and where it sits within the FMA. They shared how misconduct is referred and assessed, and how decisions are made in respect of regulatory responses.

They also spoke to our regulatory priorities in the context of enforcement and how they are relevant to current enforcement work.  

Got a question: We're here to help! 

We often feature questions received during industry interactions or sent to us directly.

Q: Financial advice providers need to send through regulatory returns each year – how does this work and what are they used for?

Romil Ghelani, FMA Head of Financial Advice

All licensed financial advice providers are required to complete and submit an annual regulatory return. It’s a series of questions to obtain an up-to-date understanding of the nature, size and complexity of their services.

Last year was the first time the financial advice industry was asked to complete these returns. The response was excellent, with 99% completing and submitting it on time. 33% of financial advice providers have already submitted a regulatory return for 2025.

The 1% who didn’t make the deadline last year got a call from the FMA on 1 October, reminding them of their obligations.

Financial advice provider licensees are required to complete their annual regulatory return for the 12-month period ending 30 June and submit it to the FMA by 30 September.

Romil Ghelani, FMA Head of Financial Advice, emphasised the importance of these returns in supporting New Zealand’s financial advice regime.

“Completing your regulatory return is part of being a licence holder, and helps shape the way the FMA supervises and engages with the sector,” he said. “The returns provide valuable insights into what types of products are being advised on as well as the way clients are receiving that advice.”

“It’s also a useful exercise for advice providers to take stock of their business, review compliance arrangements and if needed, update their information systems.”

• Information gathered in regulatory returns is used to produce a public industry snapshot. You can see the first of these here: Financial Advice Providers Industry snapshot 
• Financial Advice Providers can familiarise themselves with the questions here: Information for completing Financial Advice Provider regulatory returns.
• Regulatory returns are submitted through the FMA Online Services portal: myFMA

Do you have a question about regulations or what the FMA does? Now's your chance to ask! Simply email your question to questions@fma.govt.nz with "FMA Update" in the subject line.

Feedback on reasonable grounds for financial advice

We are inviting 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.

Get in touch with us at consultation@fma.govt.nz by Thursday 23 October 2025 if you would like us to contact you to arrange a time to discuss. You can also send us your comments in writing.

We will carefully consider all input and may proceed with further consultation on potential changes to the guidance.

Code of Professional Conduct for Financial Advice update

The Code of Professional Conduct for Financial Advice Services has been updated.

The update includes:

• Recognition of version 3 of the NZ Certificate in Financial Services (Level 5) (alongside version 2).
• Retaining the Level 5 outcomes as the minimum standard for designing an investment plan, and removing the interim status of Code Standard 7. The revised Code notes that in some advice situations, ensuring financial advice is suitable may require competence, knowledge and skill in addition to the minimum standards.
• Change to Code Standard 9, from “maintain” to “continually develop” competence, knowledge, and skill. The standard also has expanded commentary to include both structured and informal learning activities.

The new version of the Code is published on the Financial Advice Code Committee’s website here. The Minister of Commerce and Consumer Affairs has approved this new version of the Code, which will take effect on 1 November 2025.

Climate-related Disclosures: 2025 review insights

The FMA is responsible for the independent monitoring and enforcement of the climate-related disclosures (CRD) regime.
 
Our latest CRD report provides useful feedback for climate reporting entities to improve the disclosures in their climate statements, based on our reviews.  The purpose and scope of our reviews was to assess compliance with the requirements of the CRD regime, identify areas for improvement, and provide useful feedback to enhance the quality of future disclosures.

This report is an extension of our first Insights Report issued in December 2024 and is primarily intended for climate reporting entities, their directors and other interested parties, such as assurance practitioners and advisers.

Imposter Facebook pages, profiles and advertisements

There has been a surge of cases where scammers use Facebook and Instagram profiles and advertising to impersonate New Zealand financial commentators and business leaders, including Carmel Fisher, Frances Cook, Mike Hosking and Gareth Morgan.

These pages use deepfake videos to promote free investment advice WhatsApp groups and encourage victims to invest in fake online investment platforms.

Sam McGuire, FMA Manager Regulatory Services, said this latest surge of deepfake images and video is a reminder that people should be very cautious of anyone on social media promoting investments.

"Scammers create a social media profile impersonating a business leader or notable figure. They publish ads on social media platforms like Facebook and Instagram, often including deepfake videos of the people being impersonated," she said. "In these ads, the scammers speak about the person’s successful investment history. The ads encourage viewers to join an investment advice WhatsApp group."

It's here that an investment "mentor" or "coach" provides trading tips or recommends buying certain shares.

After payments are made into a recommended online trading platform, victims try to withdraw their investments, but are told to pay fees before money is paid out. Even if these fees are paid, no money is received.

If you come across these ads or investment platforms, do not click on them and do not give them your personal information.

See previous imposter warnings here:

• Fake political endorsement warning: fake news stories and deepfake videos - multiple trading platforms 
• Fake Celebrity Investment Scam – Multiple trading platforms 
• Imposter Facebook pages used to promote WhatsApp investment scam
• WhatsApp educational and investment platform scam
   

Les Vela licence cancelled and financial adviser de-registered

A financial adviser alleged to have applied for health and life insurance for non-existent people to receive commission payments is being de-registered and has had his financial advice provider licence cancelled.

Les Vela Limited’s (trading as Wise Insurance) financial advice provider licence has been cancelled. The Registrar of Financial Service Providers has been directed to de-register financial adviser and Les Vela Limited’s sole director and shareholder, Le Zhou (also known as Eric), from the Financial Service Providers Register, and prevent his re-registration for five years.

“Under current weaker economic conditions we are seeing an increase in fraudulent activity by financial advisers, particularly in relation to insurances and mortgages," said FMA Executive Director of Response and Enforcement Louise Unger. "While these instances are the exception rather than the norm, the severity of the conduct makes this a priority for the FMA to address.” 

Following notification from the impacted insurer, the FMA investigated 15 insurance policy applications submitted by Mr Zhou on behalf of 27 non-existent individuals, which had resulted in payment of $260,937 in commissions being paid.

Misleading or fraudulent activity by financial advisers is a focus for the FMA, as outlined in the recently issued Financial Conduct Report which lists regulatory priorities for the coming year.

Fair dealing cases update 

Warning for customer overcharging

Kiwibank has been warned after failing to apply fee waivers to certain joint account customers.

Between approximately March 2005 and November 2024, different versions of Kiwibank’s Fees and Limits brochures represented that customers would not be charged transaction fees on certain accounts if they were under 18 or 19 years of age or over 65.  However, since at least 2011 Kiwibank charged account fees on joint accounts where the secondary account holder met the age-based criteria, but the primary holder did not.
Read more here.

Misleading statements admission from Southern Cross Travel Insurance - $1m paid to Crown 

Following an investigation, Southern Cross Benefits Limited (trading as Southern Cross Travel Insurance) admitted liability for breaches of fair dealing laws and has paid $1,105,000 to the Crown.

While statements on the Southern Cross Travel Insurance website and emails to customers represented that discounts would be applied to customers’ entire premiums, the discounts were only applied to base premiums. Southern Cross Travel Insurance had intended that the discounts would only apply to base premiums but their communications to customers did not clearly communicate this.

The difference between the discounts that customers received, and the discounts they would have received if the discounts had been applied to their entire premiums, was $3,501,221.
Read more here.

Key takeaways for boards, CEOs and senior executives

We encourage boards, executives and leaders across the industry to consider any insights from these fair-dealing investigations, and others like them, when thinking about how to ensure better outcomes for their customers and markets.

Financial institutions play a crucial role in delivering vital financial products and services to consumers and it’s essential that consumers have access to products and services they need and can trust these will perform as expected.

The banking, non-bank deposit taking and insurance sectors have made significant improvements to conduct risk management practices since the RBNZ and FMA Conduct and Culture Reviews in 2018 and 2019. We are aware, however, that risks remain from reliance on legacy technology systems and manual controls and processes, as well as inadequate staff training.

As identified in our recently published Financial Conduct Report, as part of our regulatory priorities for 2025/2026, we are expecting to see proactive product reviews for existing products. Firms need to identify the root cause of any issues, escalate appropriately, and report to the FMA with clear and accurate information about the issue and proposed response where they believe there has been a material contravention.

Where harm has occurred, firms must take action to stop further harm and prioritise any remediation. This includes investing in improvements in controls and technology to fix the root cause.

The FMA wants to see fair, high-quality ongoing service to well-informed investors and consumers, and we are confident that financial institutions want this too.

Meet the team: Market Conduct 

Our Response and Enforcement function is made up of the teams who assess and address conduct that poses harm to New Zealanders at the more significant end of the spectrum, as well as our specialist supervision teams who supervise, monitor and deal with conduct that applies across different sectors.

We are introducing these teams, sharing more about the work that they do as well as the impact they hope their work will have.

This month we are introducing the Market Conduct team, who focus on the conduct of people and entities operating or participating in New Zealand’s capital markets.

The work of the team goes to the heart of the Financial Markets Conduct Act’s purpose – to promote and facilitate financial markets that are fair, efficient, and transparent, fostering public confidence and participation.

The importance of their role is also reflected in our recently published regulatory priorities for capital markets – tackling misleading disclosure by wholesale issuers, insider conduct by senior managers and directors, and breaches of continuous disclosure obligations.

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