PWC summarise changes outlined by the CoFI regime

PWC have produced a useful summary of the key changes outlined by Financial Markets (Conduct of Financial Institutions) Amendment Act (CoFI), which was passed on 29 June 2022. License applications opened in July this year and CoFI will come into force in March 2025. The Ministry of Business, Innovation and Employment (MBIE) is working on regulations to support the CoFI regime, which are expected to be released later this year.

In short, the key aspects of the CoFI regime are:

·         Promoting good conduct and culture.

·         Complying with a set of duties and obligations that help protect customers and promote good conduct.

·         Financial institutions need to be licensed by the Financial Markets Authority (FMA) to operate in New Zealand.

·         The FMA has increase supervisory and enforcement powers.

·         A focus on delivering good outcomes for customers.

Penalties for breaches of CoFI’s regulatory requirements include:

·         The FMA taking enforcement action which could include imposing fines, giving directs to take corrective action or taking the institution in breach to court.

·         Maximum penalties of $5 million for companies and $500,000 for individuals.

·         The FMA could order compensation for customers.

·         The FMA could suspend or cancel the licence of a financial institution.

·         Reputational damage.

PWC set out a helpful guide of activities you can do now and in future to prepare for COFI. The FMA has information on Fair Conduct Programmes and more detailed information on CoFI, including how to apply for a financial institution licence here.

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