Welcome to our new series of sector-specific regulatory roundups. This edition focuses on financial regulation in New Zealand, where conduct reforms, monetary policy shifts, and AML/CFT enforcement are reshaping the regulatory landscape. We’ll be publishing regular sector-by-sector updates from across the region to keep you informed and ahead.
From AML/CFT reform and structural oversight changes to Reserve Bank recalibrations and evolving enforcement priorities, New Zealand’s financial regulatory environment is entering a new phase. This month’s developments reveal a system in transition: streamlining in some places, tightening in others, and signalling louder expectations across the board.
The shift is not just about rules – it’s about posture. Regulators are moving with greater confidence, asserting broader mandates over conduct, market innovation, and systemic risk. From Parliament to the courtroom to the central bank, the theme is clear: compliance is no longer just procedural. It’s cultural, contextual, and increasingly non-negotiable.
Financial markets tighten around control and compliance
New Zealand’s financial regulators are preparing to assert greater oversight over the conduct and structure of financial service providers. The Financial Markets Conduct Amendment Bill, now before select committee, would require Financial Markets Authority (FMA) approval for major shareholding changes in licensed entities and give the regulator the power to conduct on-site inspections without notice.
The bill is part of a broader effort to streamline compliance and modernise the regulatory framework. New regulations in effect since 12 June support this by removing the requirement for forward-looking financial projections in IPO prospectuses and embedding several previously separate exemptions directly into law. The FMA also revoked four exemption notices no longer considered necessary, including those related to market indices and high-value Kauri bond investments. Market participants relying on these exemptions are advised to review their compliance positions.
The Finance and Expenditure Committee is accepting submissions on the bill until 23 June.
Anti-money laundering: Final phase of AML/CFT reforms now in force
The final tranche of New Zealand’s AML/CFT reform programme has taken effect. As of 1 June 2025, reporting entities must risk-rate customers during standard or enhanced due diligence under the Anti-Money Laundering and Countering Financing of Terrorism Act. While simplified due diligence scenarios remain exempt, regulated entities are now required to record and periodically review those risk assessments.
The changes also bring online marketplaces squarely within the AML/CFT regime, closing a longstanding digital oversight gap. As TMR previously reported, these reforms mark the culmination of a multi-year process that began in 2023 and reflect a broader push to modernise and tighten financial crime controls.
Further change is already underway. Two amendment bills currently before Parliament would introduce an industry levy to support enforcement and consolidate the Department of Internal Affairs as the sole AML/CFT supervisor. Regulators are encouraging firms to ensure compliance with the June 1 requirements while preparing for a more centralised – and likely more assertive – oversight regime.
Commerce Commission sharpens focus on supermarkets and online sales
The Commerce Commission is turning up the heat on dominant supermarket chains and deceptive online retail practices. In a draft review of the Grocery Supply Code released 5 June, the Commission proposed amendments to curb retailer power over small suppliers.
Among the recommendations: supermarkets that buy products for discounted promotions but fail to pass on the savings should refund the difference to suppliers. The revised Code would also ban retaliatory conduct against suppliers who assert their rights. Feedback is open until mid-July, with a final version due by late September.
Meanwhile, the Commission has unveiled its compliance and enforcement priorities for the year ahead. Top of the list: cracking down on digital deception. Tactics like fake reviews, misleading scarcity cues, drip pricing, and manipulative “social proof” claims are all in the crosshairs. The regulator also plans to ramp up enforcement of rules against “unconscionable conduct” under the Fair Trading Act – provisions introduced in 2022 but rarely tested in court.
While the Commission prepares to hand off its consumer credit remit to the Financial Markets Authority, it is signalling that consumer protection remains its primary mission. Businesses across sectors – especially retail – should expect heightened scrutiny.
Enforcement crackdown targets unlawful lending
The Commerce Commission also filed criminal charges against an unregistered Auckland-based moneylender accused of issuing high-interest short-term loans to members of the Tongan community. The lender allegedly operated outside the bounds of financial law, offering weekly rates of up to 15% with steep penalties.
The prosecution reinforces responsible lending expectations under the Financial Service Providers Act and Credit Contracts and Consumer Finance Act, and signals that regulators are alert to the risks posed by informal or predatory lending schemes.
Reserve Bank: Liquidity tool changes and policy normalisation
The Reserve Bank of New Zealand has taken further steps to unwind emergency-era monetary settings and reassert a conventional liquidity framework. For financial regulators, these changes signal a return to stability – and a clearer delineation of central bank support mechanisms in the current economic environment.
Effective 17 June, the Reserve Bank discontinued its Standing Repo Facility, citing limited usage over the past year. Weekly Reserve Bank bill auctions were also shelved, although Reserve Bank bills may still be issued through Open Market Operations in response to market demand.
Pricing on key facilities has also been recalibrated. The Overnight Reverse Repurchase Facility (ORRF) now stands at OCR plus 50 basis points, while the Bond Lending Facility has reverted to OCR minus 50. These moves reaffirm the status of both tools as emergency backstops rather than regular liquidity channels.
The Official Cash Rate remains at 3.25%, with no change to the Overnight Deposit Rate. However, the ORRF’s pricing adjustment lifts its effective rate from 3.50% to 3.75%.
For regulators, the shift reflects a maturing policy cycle and a more defined boundary between market support and intervention. While the RBNZ retains flexibility to relaunch facilities if required, the broader message is clear: emergency tools are being packed away, and a more rules-based posture is returning to centre stage.
Economic context: Growth rebound shapes regulatory direction
New Zealand’s regulators are recalibrating their posture against a backdrop of cautious optimism. After a year marked by rising compliance expectations and structural reforms across the financial system, the economic foundations are beginning to firm up – giving policymakers more latitude to balance regulatory clarity with resilience.
Gross domestic product grew by 0.8% in the first quarter of 2025, surpassing analyst expectations of 0.7% and far exceeding the Reserve Bank’s 0.4% forecast. The recovery was driven in part by stronger household consumption, an uptick in manufacturing activity, and a bounce in export volumes – particularly dairy, meat, and forestry. While services growth remained subdued, the rebound overall marks a continued recovery from the technical recession that hit in mid-2024.
With inflation slowly easing and interest rates holding steady, regulators are better positioned to focus on structural changes in financial markets, consumer protection, and institutional oversight. Economic tailwinds won’t remove regulatory pressure – but they do reduce the risk of policy whiplash or overcorrection.
For the financial sector, the message is nuanced: growth is back, but scrutiny is staying. The test ahead will be aligning regulatory momentum with economic reality – ensuring reforms continue to deliver stability, without stifling the recovery underway.
Market exemptions: FMA carves out space for electricity derivatives trading
In a move that balances regulatory flexibility with targeted oversight, the Financial Markets Authority has granted Aotearoa Energy Limited an exemption from licensing requirements under the Financial Markets Conduct Act. The exemption, effective 16 June 2025, allows the firm to operate its Prompt Electricity Market platform without holding a full financial product market licence.
The platform facilitates trading in a narrow class of electricity derivatives, exclusively among wholesale investors registered with the Electricity Authority. According to the FMA, the exemption reflects several mitigating factors: the limited and well-understood nature of the products being traded, the clear eligibility criteria for market participants, and the platform’s transparent trading structure, which relies on matching sessions rather than continuous exchange-style operations.
The exemption is time-bound and subject to strict conditions, including the provision of specified information to the FMA upon request. It remains in force until 15 June 2030.
For regulators, the decision underscores a willingness to accommodate market innovation where risks are low and controls are well-defined. It also reinforces the FMA’s case-by-case approach to exemptions – where regulatory relief is possible, but never automatic.
A financial system under tighter watch
The message for regulators – both in New Zealand and across the region – is that consistency and vigilance matter more than ever. Whether reviewing licensing controls, responding to macroeconomic shifts, or overseeing consumer conduct, agencies are being asked to do more with greater coordination and clarity.
For those in regulatory roles, these updates offer a directional signal: scrutiny is rising, tools are maturing, and expectations are sharpening. Staying aligned with these shifts isn’t just good governance – it’s core to public trust in financial markets.
If you have regulatory updates or insights to share, we’d love to hear from you. And don’t forget to subscribe for upcoming roundups from other sectors across Aotearoa, Australia, and beyond.
