The FMA is asking the industry where AI stops being information and starts being advice
Source: FMA, Thematic review: Artificial intelligence in financial advice
Question 34 of the FMA's new survey asks advice firms which legal areas create the most uncertainty. One of the sixteen options is the line between regulated advice and information. Here is where the Act draws it.
By Henry Smith · Regulation · 2026-08-07
Question 34 of the FMA's new survey for financial advice firms asks them to tick which legal or regulatory areas are creating the most uncertainty about using AI. Sixteen options are listed. One of them is "distinction between regulated financial advice and other forms of guidance or information" (FMA, Financial advice providers and advisers survey, retrieved 20 August 2026). The regulator is asking the industry where the line sits. The Financial Markets Conduct Act 2013 already answers a large part of it, and the answer is more specific than the debate around it suggests.
What the FMA actually launched
On 6 August 2026 the FMA opened an exploratory thematic review into the use of artificial intelligence in financial advice in New Zealand. It is seeking input through four targeted surveys, open until 4 September 2026, aimed at financial advice providers and advisers, technology service providers, financial services legal advisers, and industry associations and other stakeholder organisations. The survey for advice firms "asks about governance, oversight, suitability, record-keeping and consumer outcomes" (FMA, retrieved 20 August 2026).
The FMA is explicit that this is not an enforcement exercise. Its engagement overview describes the review as "an exploratory exercise rather than a formal review or enforcement initiative", intended to build understanding of "current and emerging practices" and the "legal, operational and regulatory questions arising in practice" (FMA, Engagement overview, August 2026, retrieved 20 August 2026).
The same document records the FMA's starting position on the law. "The existing financial advice regulatory framework, including the duties under the Financial Markets Conduct Act 2013 and the Code of Professional Conduct for Financial Advice Services 2025, is technology-neutral." It also records what came out of a workshop the FMA co-hosted with the University of Auckland's ALTeR centre on 15 April 2026, attended by more than 40 stakeholders, including "concerns about AI outputs blurring the distinction between the provision of factual information and giving regulated financial advice".
That is the FMA naming the problem without yet resolving it. Nothing in the review is guidance, and the FMA has not said which AI-assisted steps fall on which side.
Where the Act already draws the line
Two provisions do most of the work, and neither mentions technology.
Section 431C(1) of the FMC Act says a person gives financial advice if the person "makes a recommendation or gives an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product", makes a recommendation or gives an opinion about switching funds within a managed investment scheme, designs an investment plan of the kind described, or provides prescribed financial planning (Financial Markets Conduct Act 2013, s 431C, retrieved 20 August 2026). A contract of insurance is a financial advice product under section 6 of the same Act, so life, health, trauma and income cover are all inside the definition.
Schedule 5 clause 7 then carves out what is not financial advice. A person does not give financial advice merely by "providing factual information (for example, information about the cost or terms and conditions of a financial advice product, or about the procedure for acquiring or disposing of a financial advice product)", by "making a recommendation or giving an opinion about a kind of financial advice product in general rather than a particular financial advice product", by "recommending that a person obtain financial advice", or by "passing on financial advice given by another person (unless the person holds out that the financial advice is the person's own advice)" (same source).
Advice is only regulated financial advice if it is given in the ordinary course of a business and is not excluded under clauses 8 to 18 of Schedule 5 (s 431C(3)). Where it is, the duties in sections 431I to 431P apply, including the duty to meet standards of competence, knowledge and skill, the duty to give priority to the client's interests, and the duty to exercise care, diligence and skill.
Which steps in an AI comparison are information and which are advice
We operate an insurance comparison site, so this is our own compliance perimeter rather than a thought experiment. The table below is our reading of the statute applied to the steps an AI-assisted comparison journey actually contains. It is not FMA guidance and the FMA has published none on this point.
| Step in an AI-assisted comparison | Provision that governs it | Our reading |
|---|---|---|
| Displaying a named insurer's published premium rate, benefit limits or exclusions | Sch 5 cl 7(a), factual information | Information, not financial advice |
| An AI summary explaining how trauma cover works as a category | Sch 5 cl 7(c), a kind of product in general | Information, not financial advice |
| Filtering a product list against criteria the user typed in | Sch 5 cl 7(a) if the output is the filtered facts | Information, until the output is framed as suitable for that person |
| Ranking named products and badging one as the right choice for this user | s 431C(1)(a), an opinion about acquiring a particular product | Financial advice |
| An AI chatbot answering "should I switch from my current insurer to this one" | s 431C(1)(a), acquiring or disposing of a particular product | Financial advice |
| An AI drafting a recommendation an adviser then reviews and signs | s 431C(1)(a) with ss 431I to 431P applying to the adviser and the provider | Financial advice given by the licensed person, whatever drafted it |
| Telling the user to speak to an adviser | Sch 5 cl 7(d), recommending a person obtain advice | Not financial advice |
| Reproducing an adviser's recommendation without holding it out as your own | Sch 5 cl 7(e) | Not financial advice |
Sourced to sections 6 and 431C and Schedule 5 clause 7 of the Financial Markets Conduct Act 2013, retrieved 20 August 2026. Classification under the Act turns on the facts of each case and this table is our reading, not a legal opinion and not the FMA's position.
Two things follow that are easy to miss. The first is that the trigger is a recommendation or opinion about a particular product, not the presence of a model. A deterministic filter that ranks and badges is advice. A large language model that recites a published exclusion is not. The second is that the exclusions in clause 7 are about the character of the output, not who produced it, which is exactly why a generative system can cross the line inside a single sentence without anyone deciding that it should.
The FMA's own survey design reflects this. Question 5 asks firms to say where AI sits in the advice process and lists "research and product comparison" as a separate step from "suitability assessment/ recommendations" (FMA, Financial advice providers and advisers survey, retrieved 20 August 2026). Question 15 asks what level of human review is applied, with options running from adviser sign-off on every output down to "AI outputs are used directly with customer without adviser review".
What this means if you are comparing cover with an AI tool
Ask the tool one question: is it telling you what a policy says, or telling you what to buy. If it is doing the second, the business behind it needs a financial advice provider licence, and the person or firm giving that advice owes you the duties in sections 431I to 431P, including putting your interests first.
QuoteHub is operated by Craig Smith Business Services Limited, trading as Smiths Insurance and KiwiSaver, a licensed Financial Advice Provider, FSP712931. We read the public documents for this piece. We were not briefed, and we have not spoken to the FMA about the review.
The honest limits
The FMA has published no guidance on where AI outputs sit against section 431C, and this review is expressly not an attempt to write any. The engagement overview says the FMA "may" publish a high-level summary of observations, engage further with industry, or use the learnings to inform future guidance. There is no committed output and no date.
The survey questions we quote come from the PDF copies the FMA publishes "for reference purposes only"; the FMA states the survey portal version is definitive, so wording may differ. We could not read the responses, which are not public, and the FMA says reports derived from the questionnaire "will generally be aggregated and anonymised".
Nothing here is legal advice. Whether a given output is regulated financial advice depends on the whole of the interaction and on exclusions in Schedule 5 clauses 8 to 18 that this piece does not work through.
Sources
- FMA, Thematic review: Artificial intelligence in financial advice
- FMA, Thematic review on artificial intelligence in financial advice: Engagement overview
- FMA, Financial advice providers and advisers survey questions
- Financial Markets Conduct Act 2013, section 431C and Schedule 5 clause 7
- FMA, Access to financial advice in New Zealand
- riskinfoNZ, FMA Review on Use of AI in Financial Advice
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