Insurance Regulation in NZ: How the FMA Protects You
If you have ever wondered who is looking out for you when you buy insurance, the answer starts with three letters: FMA. The Financial Markets Authority is New Zealand's conduct regulator for financial services, and it plays a central role in making sure that the insurance advice you receive is fair, competent, and genuinely in your interest.
This guide explains how insurance regulation works in New Zealand, what changed when the new financial advice regime came into effect, what duties your adviser owes you, and how to verify that the person giving you advice is actually licensed to do so.
What the FMA Does
The Financial Markets Authority is an independent Crown entity established in 2011 that regulates financial markets and financial services across New Zealand, including insurance. FMA oversight covers licensing of financial advice providers, market conduct by insurers and advisers, enforcement action against misconduct, and consumer education, working alongside the Reserve Bank, which licenses insurers under the Insurance (Prudential Supervision) Act 2010.
The FMA's role in insurance is broad. It covers:
- Oversight of financial advice providers. Any person or firm giving financial advice (including insurance advice) must operate under an FMA-licensed Financial Advice Provider and meet ongoing conduct obligations.
- Market conduct regulation. The FMA monitors how insurers and advisers treat their customers, and takes enforcement action when it finds misconduct.
- Licensing of insurers. Under the Insurance (Prudential Supervision) Act 2010, all insurers operating in New Zealand must be licensed by the Reserve Bank. The FMA works alongside the Reserve Bank to ensure consumer outcomes are protected.
- Consumer education. The FMA provides guidance and tools to help New Zealanders make better financial decisions, including information on insurance products and how to choose an adviser.
In short, the FMA exists to promote fair, efficient, and transparent financial markets. For insurance consumers, that means someone is watching to make sure the system works as it should.
The Financial Markets Conduct Act 2013
The Financial Markets Conduct Act 2013 is the legal backbone of insurance regulation in New Zealand, governing how financial products including insurance are offered, sold and managed. The FMC Act sets disclosure rules, fair dealing requirements barring misleading or deceptive conduct, and the framework for regulated financial advice in Part 6, which was substantially rewritten in 2021.
The FMC Act sets out:
- Rules for how financial products must be disclosed to consumers
- Requirements for fair dealing (no misleading or deceptive conduct)
- The framework for regulating financial advice, including who can give it and what standards they must meet
- Enforcement powers for the FMA, including the ability to issue warnings, impose conditions, or take court action
For everyday insurance consumers, the most important part of the FMC Act is Part 6, which deals with financial advice. This is the part that was substantially rewritten when the new financial advice regime came into force in 2021.
The New Financial Advice Regime (2021)
On 15 March 2021, New Zealand's new financial advice regime took effect. This was the single biggest change to insurance regulation in a generation. It replaced the old AFA and RFA (Registered Financial Adviser) categories with a single, unified regime.
What changed
Under the old system, there were two tiers of adviser. AFAs were subject to stricter rules and could give advice on a wider range of products. RFAs operated under a lighter regulatory framework. The distinction was confusing for consumers and created inconsistencies in the level of protection people received.
The new regime replaced both categories with a single concept: the Financial Advice Provider (FAP). Under this system:
- Every person or business that gives regulated financial advice must operate under a FAP licence issued by the FMA.
- Individual advisers within a FAP do not need their own individual licence, but they must be listed on the Financial Service Providers Register (FSPR) and meet competence, knowledge, and skill standards set by the Code of Professional Conduct for Financial Advice Services.
- All advisers, regardless of who they work for or what products they advise on, are held to the same conduct duties.
This means that whether you are getting advice from a large corporate adviser firm or a sole practitioner working from their home office, the same rules apply. That is a significant improvement for consumers.
Why it matters for you
The new regime gives you a clearer set of protections. You no longer need to work out whether your adviser is an AFA or an RFA or figure out which set of rules applies to them. Every adviser who gives you insurance advice must meet the same duties, follow the same code of conduct, and be accountable to the same regulator.
What "Licensed Financial Advice Provider" Means
A licensed financial advice provider, or FAP, is a firm the Financial Markets Authority has licensed to give regulated financial advice in New Zealand under the Financial Markets Conduct Act 2013. Licensing is the correct term for the current regime: "licensed financial adviser" described an individual category that ended with the old regime in March 2021, and being registered on the Financial Service Providers Register is not the same thing as holding an FMA licence. A FAP licence requires appropriate systems and processes, advisers who meet competence standards, complaints handling procedures, and professional indemnity insurance. Licensing is ongoing, and the FMA can impose conditions, suspend or cancel a licence.
- Has appropriate systems and processes in place
- Employs or engages advisers who meet the required competence standards
- Has adequate complaints handling procedures
- Maintains professional indemnity insurance
- Can meet its ongoing regulatory obligations
Being licensed is not a one-off event. FAPs must comply with ongoing conditions, submit to FMA monitoring, and report certain events (like complaints or breaches) to the regulator. The FMA can impose additional conditions, suspend, or cancel a FAP's licence if standards are not met.
For consumers, the FAP licence is a quality signal. It means the firm has been vetted, is subject to regulatory oversight, and has agreed to operate within a defined set of rules.
The Duties Your Adviser Owes You
Every person who gives regulated financial advice in New Zealand owes the client a set of legal duties: competence, knowledge and skill, priority to the client's interests ahead of the adviser's own, care, diligence and skill, no misleading or deceptive conduct, and disclosure of how they are paid. The duties come from the Financial Markets Conduct Act and the Code of Professional Conduct for Financial Advice Services.
Duty to meet standards of competence, knowledge, and skill
Your adviser must have the qualifications, training, and expertise necessary to give you competent advice on the products they are advising on. For insurance, this means they need to understand the products, the market, and the specific risks relevant to your situation.
Duty to give priority to the client's interests
This is the cornerstone duty. If there is a conflict between your interests and the adviser's interests (or their firm's interests), the adviser must prioritise your interests. For example, if an adviser would earn a higher commission by recommending Product A but Product B is genuinely better for you, they must recommend Product B.
Duty of care, diligence, and skill
Your adviser must exercise reasonable care and diligence when giving you advice. This means they should take the time to understand your situation, ask the right questions, consider the relevant options, and explain their recommendations clearly.
Duty to not engage in misleading or deceptive conduct
Advisers must not mislead you about any aspect of the advice they are giving, the products they are recommending, or the fees and commissions involved.
Duty to disclose information
Your adviser must tell you certain things before giving you advice, including who they work for, what products they can advise on, how they are paid (including commissions and other incentives), and any conflicts of interest that might affect their advice.
These duties are not optional guidelines. They are legal obligations, and advisers who breach them can face enforcement action from the FMA, including fines and prohibition orders.
How to Check Your Adviser Is Properly Licensed
Checking that an insurance adviser is properly licensed in New Zealand takes three steps. Ask the adviser for their Financial Service Provider (FSP) number, search that number on the Financial Service Providers Register, then confirm the firm holds a current FAP licence on the Financial Markets Authority register. A refusal to supply an FSP number is a red flag.
Step 1: Ask for their FSP number
Every licensed financial advice provider has a Financial Service Provider (FSP) number. Ask your adviser for this number. If they cannot or will not provide it, that is a red flag.
Step 2: Search the FSPR register
Go to the Financial Service Providers Register at fsp-register.companiesoffice.govt.nz. Enter the FSP number or the adviser's name. The register will show you whether the provider is registered, what services they are registered to provide, and their current status.
Step 3: Check the FMA's register
The FMA maintains its own register of licensed Financial Advice Providers. You can search this at fma.govt.nz. This will confirm whether the firm holds a current FAP licence.
What to look for
- The provider's status should be "registered" and their licence should be current.
- Check that the provider is licensed to give advice on the type of product you are interested in (e.g., life insurance, health insurance, income protection).
- If anything looks wrong or you cannot find the provider on either register, contact the FMA directly before proceeding.
Your Rights as an Insurance Consumer
New Zealand's regulatory framework gives insurance consumers a defined set of rights: advice given in your best interest rather than the adviser's, disclosure of how the adviser is paid, a disclosure statement before advice, access to a fair complaints process and an independent disputes resolution scheme, plain-English product information, and a cooling-off period of usually 14 to 30 days.
You have the right to:
- Receive advice that is in your best interest, not the adviser's
- Be told how your adviser is paid, including any commissions or incentives
- Receive a disclosure statement before advice is given
- Access a fair and transparent complaints process
- Have your complaint heard by an independent disputes resolution scheme if you cannot resolve it directly with the provider
- Access clear, plain-English information about the products you are buying
- Cancel most insurance policies within the cooling-off period (usually 14 to 30 days)
These rights exist regardless of how you buy your insurance, whether through an adviser, direct from an insurer, or through a comparison platform.
Ready to compare your options? Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name. Henry Smith is a Financial Adviser (FSP1010699). We can help you compare insurance from across the New Zealand market. Get started here.
The Fair Insurance Code
The Fair Insurance Code is a voluntary industry code maintained by the Insurance Council of New Zealand (ICNZ), and most major New Zealand insurers are signatories. The code sets minimum standards for claims handling timeframes, clear communication of policy terms, complaints handling, selling and marketing, and treatment of vulnerable customers, and was updated in 2024 with stronger plain-language provisions.
The code covers areas like:
- Claims handling timeframes and processes
- Clear communication about policy terms and conditions
- How insurers should handle complaints
- Standards for selling and marketing insurance products
- How insurers should treat vulnerable customers
While the Fair Insurance Code is not legally binding in the same way as the FMC Act, insurers who are signatories are expected to comply. If an insurer fails to meet the code's standards, it can be raised as part of a complaint to the insurer's disputes resolution scheme.
The code was updated in 2024 to include stronger provisions around plain language, claims handling, and the treatment of natural disaster claims. You can find the full code on the ICNZ website.
The IFSO Scheme: Where to Go if Things Go Wrong
The Insurance and Financial Services Ombudsman (IFSO) Scheme is New Zealand's independent disputes resolution scheme for complaints about insurance claim decisions, adviser conduct, complaints-process delays, policy cancellations and premium disputes. The service is free for consumers, and the IFSO can make binding decisions on complaints involving lump sums of up to $500,000 plus GST, the limit that has applied since 18 July 2024.
The IFSO Scheme is an independent disputes resolution scheme that covers complaints about:
- Insurance claims decisions
- The conduct of insurance advisers and financial advice providers
- Delays or failures in the complaints process
- Policy cancellations and premium disputes
The service is free for consumers. The IFSO can make binding decisions on complaints involving lump sums of up to $500,000 plus GST (the limit in place since 18 July 2024).
How the process works
- Raise the complaint with your provider first. The IFSO requires that you give your insurer or adviser a reasonable opportunity to resolve the issue directly.
- If that does not work, contact the IFSO. You can lodge a complaint online, by email, or by phone.
- The IFSO will investigate. They will review the evidence from both sides and may attempt to mediate a resolution.
- If mediation fails, the IFSO can make a binding decision. The provider must comply with the IFSO's decision. You are not bound by it; if you disagree, you can still take the matter to court.
For more on the complaints process, see our guide on how to resolve insurance complaints.
How QuoteHub Fits In
Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name. That means we are regulated by the FMA and subject to the same duties and obligations as any other FAP in New Zealand.
When you use QuoteHub, you are dealing with a firm that:
- Operates under an FMA-licensed FAP for financial advice on insurance products
- Operates under the Code of Professional Conduct for Financial Advice Services
- Has advisers who meet the required competence, knowledge, and skill standards
- Discloses how we are paid and any potential conflicts of interest
- Is a member of an approved disputes resolution scheme
- Compares insurance options from across the New Zealand market, not just from a single insurer
We built QuoteHub because we believe New Zealanders deserve access to clear, unbiased insurance advice without the jargon and sales pressure. Being a licensed FAP is not just a regulatory requirement for us; it is central to how we operate.
You can verify our registration on the FSPR register by searching for FSP712931.
Want to see what is available? Compare life insurance, income protection, and more with QuoteHub. It is free, takes a few minutes, and you will get personalised options from across the market.
Frequently Asked Questions
Who regulates insurance in New Zealand?
The Financial Markets Authority (FMA) regulates the conduct of insurers and financial advice providers in New Zealand. The Reserve Bank of New Zealand handles prudential supervision (making sure insurers are financially sound). Together, they provide a dual layer of oversight.
What is a Financial Advice Provider (FAP)?
A FAP is a person or business licensed by the FMA to give regulated financial advice, including advice on insurance. All insurance advisers in New Zealand must operate under a FAP licence. The FAP is responsible for the quality and compliance of the advice given by its advisers.
How do I check my insurance adviser is properly licensed?
Search the Financial Service Providers Register (FSPR) at fsp-register.companiesoffice.govt.nz using your adviser's name or FSP number. You can also check the FMA's register of licensed FAPs on the FMA website.
What should I do if I get bad insurance advice?
Start by raising a formal complaint with the adviser or their FAP. If the issue is not resolved, escalate it to the relevant disputes resolution scheme (such as the IFSO Scheme). If you believe the conduct is serious, you can also report it directly to the FMA.
What duties does my insurance adviser owe me?
Your adviser must prioritise your interests, give competent advice, exercise care and diligence, disclose how they are paid, and not mislead you. These duties are set out in the Financial Markets Conduct Act and the Code of Professional Conduct for Financial Advice Services.
Is QuoteHub regulated?
Yes. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name. We are regulated by the FMA and operate under the Code of Professional Conduct for Financial Advice Services.
Disclaimer: This article is general information only and does not constitute personalised financial advice. Insurance needs vary based on individual circumstances. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name. Henry Smith is a Financial Adviser (FSP1010699). For advice tailored to your situation, get in touch with a QuoteHub adviser. Information in this article is current as at March 2026 and may change. For the latest regulatory information, visit fma.govt.nz.
References
- Financial Markets Authority (FMA), Insurance guidance
- ACC New Zealand
- Sorted.org.nz, Insurance guides
- Insurance & Financial Services Ombudsman (IFSO)
- MoneyHub NZ, Insurance resources
- ACC New Zealand, What we cover
- Financial Markets Authority (FMA)
- EQC, Toka Tu Ake
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