What the FMA Expects from KiwiSaver Advisers in 2026

In December 2025, the FMA censured Opes Group for record keeping failures, unmanaged conflicts of interest, and insufficient adviser oversight. No clients were harmed. The regulator enforced anyway, because the gaps “increased the risk of detriment to clients.”

That is the regulatory environment heading into 2026. New Zealand’s financial markets authority is not waiting for client complaints. It is looking at your systems, your records, and your processes, and asking whether they are good enough to prevent harm before it happens.

This article sets out what is being actively monitored for KiwiSaver advice practices, what recent censures reveal about regulatory priorities, and what you can do now to make sure your practice is ready.

The Regulatory Framework for KiwiSaver Advisers

If you give regulated financial advice on KiwiSaver, your obligations come from three sources:

1. The Financial Markets Conduct Act 2013 (FMC Act), which sets the statutory duties including care, diligence, skill, and client interest priority.

2. The Code of Professional Conduct for Financial Advice Services, which translates those duties into nine enforceable standards. Version 2 of the Code came into force on 1 November 2025, clarifying competence requirements.

3. The Standard Conditions attached to your FAP licence, which impose ongoing obligations around record keeping, complaints handling, regulatory returns, outsourcing, business continuity, and cybersecurity.

A common misconception is that the Conduct of Financial Institutions (CoFI) regime applies to financial advisers. It does not. CoFI covers banks, insurers, and non-bank deposit takers. FAPs are governed by the framework above.

What Is Being Focused On in 2026

The inaugural Financial Conduct Report, published in June 2025, sets out sector-by-sector priorities. For financial advice, four areas stand out.

1. Conduct Affecting Vulnerable Consumers

Complaints involving adviser conduct that affects vulnerable people will be prioritised, particularly regarding unsuitable products and unnecessary costs. Recent cases reinforce this. Filcare Services had its licence cancelled for failing to ensure that approximately 1,800 clients, predominantly Filipino migrant workers, understood the implications of switching insurance policies. Go Financial Solutions was censured for similar failures with clients who spoke English as a second language.

If you advise on KiwiSaver, pay particular attention when working with clients who may have limited financial literacy, language barriers, or who are in vulnerable circumstances. The Code Standard 4 obligation to ensure clients understand your advice is not a formality. The regulator is checking whether you actually took reasonable steps, and what evidence you have.

2. Fee and Commission Transparency

Across the sector, the regulator has observed “lack of clarity on commissions and incentives, missing or inconsistent information, and delayed disclosure.” CEO Samantha Barrass stated that “clients need to receive appropriate information about the costs, nature and scope of advice so they can make informed decisions.”

For KiwiSaver advice, this includes being upfront about any fees your practice charges, any commissions from providers, and the cost differences between the fund you are recommending and alternatives the client might consider. Disclosure must happen at the right time, not weeks after advice is given.

3. Advice Accessibility

A comprehensive review of advice accessibility was announced in April 2025, examining barriers to advice provision including regulatory burden, remuneration structures, and digital innovation. A striking statistic: only 36 FAPs, less than 3% of all licensed providers, currently offer digital advice, yet those 36 serve over 86,000 retail clients.

The signal is clear: more New Zealanders should be able to access quality financial advice. Practices that use technology to deliver compliant advice more efficiently are aligned with where the regulator wants the industry to go.

4. Outcomes-Focused Regulation

The regulatory approach has moved from tick-box compliance to what the FMA calls outcomes-focused regulation. The focus is on “end results that regulation is aiming to achieve for consumers.” Having a policy on paper is not enough. The regulator wants evidence that your processes actually produce good client outcomes.

The Five Code Standards That Matter Most

The Code of Professional Conduct has nine standards. For KiwiSaver advice, five are where enforcement concentrates.

Standard 1: Treat Clients Fairly

Treat every client consistently. Respect them, listen to their concerns, communicate clearly, and do not exploit vulnerabilities or apply undue pressure. This sounds obvious, but monitoring has found practices where the quality of service varied significantly depending on who the adviser was or how valuable the client appeared to be.

Standard 2: Act with Integrity

Manage conflicts of interest. The Opes censure centred on this: vertical integration across property sales, investment planning, mortgage advice, and accounting created conflicts that were not adequately managed. If your practice receives commissions, soft-dollar benefits, or referral fees, document how you manage those conflicts and how you ensure they do not influence your advice.

Standard 3: Give Suitable Advice

This is the standard cited most often in censures. The guidance on reasonable grounds is specific about what suitability requires for KiwiSaver advice:

• Assess the client’s financial situation, needs, goals, and risk tolerance
• Consider their investment timeline and any specific circumstances
• Compare relevant products and document why the recommended fund is appropriate
• Where the recommendation involves switching from an existing fund, record the advantages and disadvantages of the change

The regulator has warned that it “will review whether records are available to show that the risks, benefits and any conflicts arising from the change were well communicated to the client.” For KiwiSaver switching advice, you need evidence of what the client held, what you recommended, and why.

Standard 4: Ensure Client Understanding

Take reasonable steps so the client genuinely comprehends your advice, including the risks, consequences, and any limitations. Monitoring found instances where advisers “took no steps at all, or put the onus on clients to follow up if they were unsure.”

This means more than emailing a PDF and hoping the client reads it. Can you demonstrate that the client had the opportunity to review your recommendation, ask questions, and confirm they understood before acting?

Standard 5: Protect Client Information

Implement reasonable safeguards against loss and unauthorised access to client data. With the new Standard Condition 5 on business continuity and cybersecurity now in effect, FAPs must maintain business continuity plans, protect critical technology systems, and notify the FMA of incidents where “the confidentiality, integrity, or availability of your information and/or your technology systems has been compromised.”

Record Keeping: The Single Biggest Enforcement Risk

Every FAP censure in 2024 and 2025 included a finding of deficient record keeping. Every one. It is the single most common reason the regulator takes action.

Standard Condition 1 requires you to “create in a timely manner and maintain adequate records in relation to your financial advice service.” Records must be kept for at least seven years and made available to the FMA within 10 working days when requested.

The published record keeping guidance lists what those records should include:

• Details about the client and the information they provided
• The advice given, including its nature and scope
• The basis for your recommendation and why you are satisfied it is suitable
• The risks and benefits you communicated
• Evidence you confirmed the client comprehended the advice
• Records of disclosure provided, including the client’s acknowledgment
• Details of any complaints and actions taken
• Records of ongoing reviews

The guidance is explicit that relying on memory is not acceptable: “In the absence of records, FAPs may have to rely on their memory of any actions and conversations with clients when providing evidence to show compliance with their obligations. This will not meet the form and manner requirement.”

They are equally explicit about what good record keeping can look like: “a digital tool that helps guide your advice process and requires relevant records to be submitted before progressing to the next stage of the interaction.”

What Recent Enforcement Actions Tell You

The enforcement pattern from 2024 and 2025 reveals exactly where the regulatory focus sits.

Opes Group (censured, December 2025). Record keeping failures, unmanaged conflicts from vertical integration, insufficient adviser oversight. Client documents were “inconsistently completed, inefficiently stored, lacking sufficient detail.” The regulator enforced despite no identified client harm because the gaps increased the risk of poor outcomes. It noted that “compliance, policies, and staff adherence had not kept pace with rapid growth.”

deVere New Zealand (censured, July 2024). Five findings including poor record keeping, inability to demonstrate suitability, and failure to confirm client understanding. Advisers recommended complex pension transfers without documented analysis of advantages and disadvantages. Risk profiles were not assessed before recommending investments.

Filcare Services (licence cancelled, June 2025). Served approximately 1,800 clients, predominantly migrant workers. No evidence that clients were informed of risks when replacing existing insurance policies. Advisers did not take reasonable steps to verify clients grasped the advice.

The consistent thread: the regulator is not asking whether your advice was ultimately good. It is asking whether you can prove it was. Can you show the process you followed, the information you gathered, the analysis you conducted, and the steps you took to ensure the client understood? If the answer to any of those is “I’d have to check my notes” or “I think I mentioned that on the phone,” you have a problem.

A Practical Checklist for 2026

Based on stated priorities, enforcement patterns, and published guidance, here is what to review in your practice:

Record keeping. For every KiwiSaver recommendation, can you produce records showing the client’s circumstances, your analysis, the recommendation rationale, and confirmation the client comprehended it? Use the record keeping self-assessment tool to identify gaps.

Suitability evidence. When you recommend a KiwiSaver fund or a switch between funds, do your records explain why that particular fund is suitable for that particular client? Not a generic rationale. A client-specific one.

Disclosure timing. Is your disclosure provided before or at the time advice is given? Not after. Monitoring found disclosure arriving “weeks after advice was given.” Check your process.

Conflicts management. If your practice receives commissions, referral fees, or has relationships with product providers, is there a documented process for identifying and managing those conflicts? Can you show how they do not influence your recommendations?

Oversight. If your FAP has more than one adviser, do you have a framework for reviewing the quality of advice being given? Monitoring found oversight frameworks that “did not test the quality of advice; it was focused on record keeping, but not the content of the records.”

Client understanding. What steps do you take to verify the client grasped your advice before acting on it? Is there evidence of those steps in your records?

Vulnerable clients. Do you have processes for identifying clients who may need additional support, such as those with limited financial literacy or language barriers?

Cybersecurity. Under the new Standard Condition 5, do you have a business continuity plan? Do you know what to do if your systems are compromised?

The Bigger Picture

The regulatory budget increased to $77.9 million for 2025/26, up $6.7 million from the previous year. The number of financial advisers in New Zealand has fallen from 9,300 in 2021 to 8,472 in 2024. The bar is rising while the number of advisers is shrinking.

At the same time, the regulator wants advice to be more accessible. Over 57,000 KiwiSaver provider switches resulted from financial advice in the most recent reporting period. The demand is there. The question is whether practices can meet it efficiently while maintaining the standards required.

Practices that rely on manual processes, paper records, and memory are increasingly exposed. Not because they give bad advice, but because they cannot consistently demonstrate they give good advice. The FMA’s own guidance endorses digital tools that structure the advice process and capture records at each stage. That is the direction of travel.

This article is for informational purposes and does not constitute legal or personalised financial advice. Regulatory requirements and FMA guidance may change. For advice specific to your practice’s compliance obligations, consult a legal professional. Sources: FMA Financial Conduct Report 2025, FAP Monitoring Insights, Code of Professional Conduct, Standard Conditions for FAP Licences, Record Keeping Guidance, Reasonable Grounds Guidance. All enforcement actions cited from FMA media releases.