Kia ora koutou

It was great to connect with financial advice providers around the country at our recent financial advice provider forums. Thank you to everyone who attended, shared insights and contributed to the discussions.

Many of these conversations reflected the priorities outlined in our Financial Conduct Report 2026/27. The forums also provided an opportunity to discuss access to financial advice in New Zealand, share practical case studies and explore key issues facing providers and consumers. 

This edition of the newsletter brings together key updates for the sector, including our regulatory priorities, insights from the forums and our broader monitoring and engagement, the AI in financial advice review and our new report on the effective protection of client assets.

We hope you enjoy this newsletter.

Andy Crow and Zenas Kim - Managers, Financial Advice

Financial Conduct Report 

We launched our second annual Financial Conduct Report at the end of June, outlining our regulatory priorities for the next 12 months. Its aim is to provide transparency about the key risks and opportunities on the FMA's radar and how we plan to tackle them.

In the financial advice sector, we are focusing on:

• Managing conflicts from remuneration structures
• Fraud detection and prevention
• Use of complaints data to drive improvements
• Digitisation opportunities (such as artificial intelligence) in financial advice

The report also includes key questions for boards, CEOs and senior executives in the financial advice sector (page 10). 

Effective Protection of Client Assets

The FMA’s Effective Protection of Client Assets report shares insights from a review of client money and property service arrangements used by financial advice providers and discretionary investment management service providers.

Protecting client assets is fundamental to investor confidence. While the licensed providers reviewed were generally meeting their obligations, we identified areas where oversight, governance, custody reporting and investor communications could be strengthened to better protect client assets.

We encourage all financial advice providers to consider the report's findings and review whether their systems, controls and oversight arrangements remain effective and proportionate to the nature, scale and complexity of their business. 

Connecting with advisers across the country: Key themes from the 2026 Financial Advice Provider Forums

Over July and August, the FMA connected with financial advisers and financial advice providers across the country at our 2026 Financial Advice Provider Forums. We delivered 14 sessions across 10 locations, with over 1,000 advisers attending. Locations included Wellington, Whangārei, Auckland, Hamilton, Tauranga, Napier, Palmerston North and Christchurch alongside online sessions for those unable to attend in person. Below are some key themes from the forums. 

Artificial intelligence, digital advice and innovation
Artificial intelligence (AI) was one of the most discussed topics at the forums. Advisers shared examples of how AI is being used to improve efficiency, support client reviews, assist with communication, and streamline fact-finding processes. Many attendees also raised questions about privacy, governance, consumer outcomes, and the growing use of public AI tools. The FMA is exploring these questions through a review of AI in financial advice.

Supporting customers in vulnerable circumstances
Case studies generated thoughtful discussions about vulnerability, suitability and client understanding. Advisers shared practical approaches including using interpreters, involving trusted support people, slowing the advice process, documenting conversations carefully, and adapting communication to individual client needs.

A recurring theme was that vulnerability looks different for every client. Rather than prescribing a single approach, the focus is on exercising professional judgement, understanding clients’ circumstances, and taking reasonable steps to support informed decision-making. 

Complaints as a source of insight
Many advisers were interested in complaint reporting requirements and what constitutes a complaint. Discussions highlighted that maintaining complaint data is not simply a regulatory requirement. It can also provide valuable insights into customer experiences, emerging issues and opportunities for improvement. Read our customer complaints information sheet. 

Access to advice
Access to advice was another common topic, with discussions covering adviser numbers, public perceptions of financial advice, remuneration models, digital channels and the evolving needs of consumers. Advisers shared their perspectives on the opportunities and challenges facing the sector, while the FMA discussed its ongoing work to better understand how New Zealanders access and engage with financial advice.

Insights from our monitoring of financial advice providers

During the 2025/26 financial year, the FMA completed a range of desk-based and onsite monitoring visits across a mix of small, medium and large firms. Monitoring activities focused on the priorities outlined in our Financial Conduct Report 2025/26 (page 9). 

Treatment of consumers in vulnerable circumstances
Improvements are required in how some financial advice providers identify and support clients in vulnerable circumstances. Several firms reported that they had never encountered any vulnerable clients, even though we identified clear indicators of vulnerability during client file reviews.

Common types of vulnerability included low financial literacy, financial hardship, English as a second language, physical or mental disability and recent life events such as the loss of a family member or marital separation. Read our customer vulnerability information sheet for information about our expectations for financial services firms to prioritise their customer vulnerability practices.

Financial advice provider complaints processes
While most firms had documented complaints processes, we found that some advisers were unable to clearly articulate what constitutes a complaint. In some cases, firms appeared to view complaints negatively rather than as an opportunity to improve their services and customer outcomes. 

Some financial advice providers did not follow their internal complaints policies and processes for maintaining complaint records. We also found some clients were not aware of how to make a complaint because this had not been disclosed during the advice process. In some cases, information about the financial advice provider’s disputes resolution scheme was missing. 

We identified gaps in training and complaints management processes, and insufficient reporting to boards or oversight bodies. When these issues were highlighted, entities took steps to improve processes, training and reporting on complaints. 

Complaints registers often lacked sufficient detail for trend analysis, limiting their usefulness for improving processes and training, and for deeper review by boards and remediation assessments. Read our information sheet on Complaints: Ensuring consumers are treated fairly.

Disclosure practices, including fees, incentives and commissions 
A recurring issue was the inadequate disclosure of early termination charges (clawback fees). In some instances, clients were caught off guard by these fees, resulting in complaints. 

We also identified poor record keeping - which made it difficult to demonstrate that fees had been discussed with clients, and disclosure statements that were unclear or difficult to understand. 

This is not a ‘tick the box’ priority for us. It’s about the clarity, timing and tone of conversations about disclosures. Good practice means clearly explaining fees, commissions and incentives, checking client understanding and keeping records that demonstrate those conversations took place.

We will be releasing more information about our review of disclosure practices later this year. 

Examples of good practice
The financial advice team also observed examples of good practice. These included:

• A financial advice provider that demonstrated a strong awareness of vulnerabilities within its client base, particularly among new migrants and clients for whom English is a second language, and implemented additional measures to support client understanding.
• A financial advice provider that clearly explained its internal complaints process and proactively informed clients that access to its dispute resolution scheme was free of charge.
• Several financial advice providers that disclosed fees clearly throughout the advice process.

Next steps
Financial advice providers monitored by the FMA received feedback letters outlining the findings from their reviews and have been asked to provide action plans to address the identified gaps and improve their practices.  

FMA licensing, engagement, monitoring and enforcement 

These highlights are from our work across licensing, engagement, monitoring and enforcement activity in the financial advice sector since 1 April 2026. 

87 financial advice provider licences approved

This has been a combination of new entrants into the industry, providers looking to introduce a financial advice service, and firms that were previously an authorised body under another financial advice provider deciding to hold their own financial advice provider licence.

11 market engagements and meetings in the sector 

These included roadshows, conferences, summits and webinars hosted by a range of industry bodies and financial advice providers. If you’d like to invite the FMA to speak at an adviser event or get-together, please email Events@fma.govt.nz.  

54 enquiries

We received and responded to 54 financial advice enquiries from individuals and organisations relating to financial advice and financial advice providers. These included queries about clarifying financial coaching versus financial advice, how to expand a financial advice service to include more products and what financial advice providers and financial advisers should do when exiting the industry.

29 misconduct reports regarding a financial advice provider or a financial adviser lodged and assessed

Notable themes include: 

• Allegations of falsifying financial information to obtain lending
• Insurance policy unaffordable and unsuitable for the client
• Competitive approaches to KiwiSaver transfers
• Insurance policy replacement and clawback-related conduct.

Not all notifications result in an investigation or formal regulatory action. Depending on the circumstances, our response may involve reviewing the entity’s risk profile, conducting desk-based or onsite reviews, making further enquiries, or engaging informally with the entity.

The FMA has issued three feedback letters over the last five months, but no formal administrative actions have been taken in relation to the financial advice sector.

Have you completed your regulatory return?  

Regulatory returns are one of the tools the FMA uses to monitor licensed entities. This is a series of questions to obtain an up-to-date understanding of the nature, size and complexity of licensees and relevant activities over the reporting period. The data is analysed to identify trends that can be used to inform monitoring activities.  

Returns for the period 1 July 2025 to 30 June 2026 need to be submitted through the myFMA portal by 30 September 2026. Licensees should already have received an email with a link to access myFMA and submit the regulatory return.

As at 21 August, 213 returns had been submitted. To familiarise yourself with questions for financial advice provider regulatory returns, you can download our guide and refer to the FAQ below. 

Have your say on AI in financial advice 

There's still time to contribute to the FMA's exploratory thematic review of AI in New Zealand's financial advice sector.

Complete our survey to help shape the FMA's understanding of how AI is influencing financial advice, and support broader conversations about responsible innovation and good consumer outcomes in New Zealand's financial markets.

The survey closes on 4 September 2026. If you would like to participate but need more time, please contact us at questions@fma.govt.nz. Thank you to everyone who has already completed the survey.

Warnings and alerts 

We regularly publish warnings containing the names of businesses or individuals you should be wary of when investing. 

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