One repealed section is the real change in the FMA taking over consumer credit
Source: FMA, Credit transfer creates single conduct regulator for financial markets
From 1 July 2026 the FMA regulates both the loan and the insurance sold alongside it. The same Act quietly deleted the requirement that it get the Commerce Commission's consent before suing a financial institution.
By Henry Smith · Regulation · 2026-08-20
Section 446N of the Financial Markets Conduct Act 2013 required the FMA to obtain the Commerce Commission's consent before commencing certain proceedings against a financial institution. It was repealed on 1 July 2026 by section 61 of the Credit Contracts and Consumer Finance Amendment Act 2026 (Financial Markets Conduct Act 2013, as at 1 July 2026, retrieved 20 August 2026). The same Act moved consumer credit regulation to the FMA. The press release covered the second change. The first is the one that alters what happens when the regulator decides an insurer's sales channel has gone wrong.
What the FMA published
On 1 July 2026 the FMA took over from the Commerce Commission as regulator for the consumer credit sector, "becoming the single conduct regulator for financial markets in New Zealand". The transfer was enabled by the Credit Contracts and Consumer Finance Amendment Act 2026, which the FMA says "centralises financial market conduct oversight, delivering clearer rules, enhanced tools and more streamlined regulation for lenders and consumers" (FMA, MR No. 2026-32, 1 July 2026, retrieved 20 August 2026).
Clare Bolingford, Executive Director Licensing and Conduct Supervision, said the FMA will "be focusing our efforts on the areas where we see the greatest potential for harm". Three initial focus areas are named: "lending practices, particularly suitability and affordability assessments", "remunerations structures and how conflicts of interest are managed", and "complaints handling processes" (same source).
Why the combined mandate matters at the point of sale
Insurance sold alongside credit has always sat awkwardly between two regimes. The finance contract was the Commerce Commission's; the insurer's conduct was the FMA's. As of 1 July both sit with one regulator, and the two named focus areas of remuneration structures and conflicts of interest are precisely the mechanics of an add-on sale.
Read the law from the buyer's side and the position is uncomfortable. Schedule 5 of the FMC Act removes several things from the regulated advice regime. Under clause 9, financial advice is not regulated financial advice if it is "given in connection with providing credit under a credit contract" and the credit is provided "as an incidental part of a business the principal activity of which is not the provision of a financial service". Under clause 10, advice from a lender to a borrower about "a consumer credit contract or relevant insurance contract" given in order to comply with the lender's responsibilities under the Credit Contracts and Consumer Finance Act 2003, or as a reasonably incidental consequence of doing so, is also outside the regime, provided "the lender has taken reasonable steps to ensure that the borrower understands that the advice is not regulated financial advice and the implications of that" (Financial Markets Conduct Act 2013, Schedule 5, retrieved 20 August 2026).
Put plainly: the person recommending mechanical breakdown cover across a car yard desk is frequently not giving you regulated financial advice, and therefore does not owe you the adviser duties in sections 431I to 431P, including the duty to give priority to your interests.
What does apply is the Conduct of Financial Institutions regime, and that runs through the insurer rather than the salesperson. Section 446C sets the fair conduct principle: a financial institution "must treat consumers fairly", which includes "paying due regard to consumers' interests", "assisting consumers to make informed decisions", "ensuring that the relevant services and associated products that the financial institution provides are likely to meet the requirements and objectives of likely consumers (when viewed as a group)" and "not subjecting consumers to unfair pressure or tactics or undue influence". Section 446D applies the principle where "an intermediary is involved in the provision" of the product, and section 446J requires the insurer's fair conduct programme to have effective controls for its distribution methods to operate consistently with the principle, to review regularly whether they do, and to remedy deficiencies within a reasonable time (same source).
Section 446Q defines an intermediary as a person involved in providing the product who is paid a commission or other consideration for that involvement. The car dealer is the intermediary. The insurer carries the duty.
| Who is in front of you | What they owe you directly | Who is accountable to the regulator |
|---|---|---|
| A lender giving advice to meet its lender responsibilities | Reasonable steps to tell you the advice is not regulated advice, Sch 5 cl 10 | The lender, under the CCCF Act and now the FMA |
| A dealer arranging credit incidental to selling you a car | Not regulated financial advice, Sch 5 cl 9 | The insurer, through its fair conduct programme, s 446J |
| A commission-paid intermediary selling add-on cover | No adviser duties under ss 431I to 431P | The insurer, as the intermediary is caught by ss 446D and 446Q |
| A licensed financial adviser | The full duties in ss 431I to 431P, including priority to your interests | The financial advice provider that engages them |
Sourced to the Financial Markets Conduct Act 2013, sections 431I to 431P, 446C, 446D, 446J and 446Q and Schedule 5 clauses 9 and 10, as at 1 July 2026, retrieved 20 August 2026. This is our reading of the statute and not legal advice; which exclusion applies is fact-specific.
The repeal is the part with teeth
Before 1 July, section 446N sat in the middle of that chain. It required the FMA to obtain the Commerce Commission's consent before commencing certain proceedings, a coordination step that existed because the two regulators' remits overlapped exactly where credit met insurance. The transfer removed the overlap, and section 61 of the Credit Contracts and Consumer Finance Amendment Act 2026 removed the section.
That is what "single conduct regulator" means in operational terms. One agency now writes the expectations for the loan and for the cover attached to it, supervises both, and can act on either without asking the other first.
The FMA has since shown where it intends to look. On 20 August 2026 it published a review of add-on insurance and extended warranties covering mechanical breakdown insurance, guaranteed asset protection insurance, payment protection insurance and extended warranties, finding that "distribution oversight was the area where industry uplift is most needed" and that there was "limited evidence of monitoring and oversight proportionate to the risks associated with commission-based and intermediated sales models" (FMA, MR No. 2026-35, 20 August 2026, retrieved 20 August 2026). We cover that report separately in our piece on the FMA's add-on insurance review.
What it means if you are sold cover at a car yard or a settlement
Ask three questions and write the answers down.
Ask whether the person selling you the cover is a financial adviser, and if they say the advice is not regulated financial advice, ask them to confirm that in writing, because clause 10 obliges a lender to take reasonable steps to make sure you understand exactly that. Ask what commission is paid on the policy and to whom, because remuneration structures and conflicts of interest are on the FMA's stated list. And ask who the insurer is, not just who the dealer is, because the insurer is the party the fair conduct principle binds and the party a complaint ultimately lands with.
You are also not obliged to buy the cover at the same desk, at the same time, or at all. Nothing in a credit contract requires the insurance to come from the lender.
The honest limits
The repeal of section 446N is on the face of the legislation. What we cannot tell you is whether it changes any outcome in practice, because the FMA has not said how often the consent step was used or whether it ever delayed a case, and neither regulator publishes that.
The FMA's release does not say how many entities transferred, does not name a first enforcement priority beyond the three focus areas, and gives no timetable. We have not seen the Credit Contracts and Consumer Finance Amendment Act 2026 in full; we read its effect through the amendment notes in the current version of the FMC Act.
The add-on insurance review referenced above was published on 20 August 2026, seven weeks after the transfer this piece covers, and is dated accordingly. Nothing here describes any individual insurer's conduct, because the FMA's review names none.
Sources
- FMA, Credit transfer creates single conduct regulator for financial markets
- Financial Markets Conduct Act 2013
- FMA, Add on insurance review highlights insurers' responsibility to deliver fair outcomes
- FMA, Add-on insurances and extended warranties review
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