The Financial Markets Authority (FMA) has opened formal consultation on proposed changes to the standard conditions applying to market services licences, including implementing standard conditions for licensed consumer credit providers.
Consultation submissions close at 5pm on 11 December 2026 and the consultation document and other information can be found here.
Licensed consumer credit providers, including banks, non-bank lenders, motor vehicle financiers and finance companies, should review the FMA's letter and consultation proposals closely. Other FMA market services licensees (and consumer credit providers that also hold other licences) are also affected by the related, broader changes to the standard conditions regime.
Consultation on standard licence conditions
The proposed reforms would consolidate standard conditions into a single document, align conditions across licence types and remove a number of existing conditions.
Importantly, the consultation proposes introducing six standard conditions for licensed consumer credit providers covering:
- business continuity and technology systems;
- complaints handling;
- ongoing licensing requirements;
- outsourcing arrangements;
- record keeping; and
- regulatory reporting and returns.
The FMA is seeking feedback on the clarity and practicality of the proposed conditions, compliance costs, barriers to entry and whether a proposed six-month implementation period would provide sufficient time for businesses to prepare.
FMA priorities for the consumer credit sector
Along with commencing the consultation, the FMA has also issued an open letter to consumer credit providers setting out its supervisory expectations following the transfer of consumer credit regulation from the Commerce Commission to the FMA on 1 July 2026. The letter can be found here.
The letter identifies three principal supervisory priorities for the consumer credit sector over the coming year, drawn from its Financial Conduct Report 2026/27 being:
- Remuneration conflicts and intermediary arrangements: Commission-based and performance-based remuneration paid to intermediaries, such as motor vehicle dealers, brokers and referral partners that can incentivise unsuitable lending. The FMA has stated it will undertake targeted monitoring of motor vehicle lending over the next 12 months, and expects all lenders using intermediaries to review whether related conflicts are being adequately managed.
- Complaints handling: The FMA will undertake targeted monitoring of lenders' complaints processes and will work with the sector and related stakeholders to ensure customers are aware of how to complain, and that processes allow consumer concerns to be addressed promptly, fairly and transparently.
- Suitable and affordable lending: Lenders will be expected to reflect on the adequacy of their suitability and affordability assessment processes, and to consider the effective controls in place and how they identify and support consumers experiencing financial hardship
What next?
The consultation is significant for many financial service providers but will be particularly important for consumer credit providers, some of which will have only held a market service licence of any type since 1 July 2026. We encourage all licensed consumer credit providers to carefully consider the impact of the proposed requirements (including on compliance frameworks and governance practices) and to engage in the consultation.
Our experts would be happy to discuss any aspect of the consultation outlined and to assist with assessment of impact and any submissions. Please reach out if you would like to attend our upcoming Round Table event and hear from the FMA about its regulatory approach, expectations, and priorities for the consumer credit sector.
This article was co-authored by Maddy Clarke, a Law Clerk in our Banking and Finance team.
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