The Financial Markets (Conduct of Institutions) Amendment Act 2022 (otherwise known as CoFI) is now in effect. From yesterday 31 March 2025, all relevant financial institutions must hold a CoFI licence issued by the Financial Markets Authority (FMA) in order to operate. In addition, yesterday evening the Financial Markets Conduct Amendment Bill (the Bill) was introduced into Parliament. When enacted it will modify the CoFI regime to facilitate easier compliance.
A link to the media release from the FMA can be found here.
Who should read this? Why?
All CoFI financial institutions (registered banks, licensed insurers and licensed non-bank deposit takers) and their intermediaries will be aware that CoFI is now in force. However, all consumers should familiarise themselves with CoFI to understand the protections available to them under the new regime.
What does it cover?
Fundamentally, CoFI is about treating customers fairly. This is known as the fair conduct principle.
CoFI requires financial institutions to establish, implement and maintain a fair conduct programme that is designed in a way that ensures compliance with the fair conduct principle. Financial institutions and their intermediaries are also required to comply with the incentive restrictions, which prohibit certain incentives based on volume or value of products or services.
CoFI also significantly expands the FMA’s mandate as a conduct regulator to include financial institutions, and gives new responsibilities in terms of licensing, monitoring, and enforcement.
The Bill proposes amendments to CoFi to simplify requirements to the fair conduct programme minimum requirements (amongst other financial markets reforms).
What’s next?
The FMA have indicated in their recent Outcomes-Focused Regulation that it intends to be a proactive regulator of conduct, prioritising action against conduct it believes is likely to produce poor outcomes, either for consumers or for market integrity.
The FMA have indicated that they will release a thematic report of fair conduct programmes later this year and will also host a series of webinars over coming months to support financial institutions as the new CoFI regime commences.
If you have any questions in relation to CoFI or the new Bill, or how your business can comply under the new requirements, please contact one of our experts.
This article was co-authored by William Ma, Solicitor in our Financial Services team.
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