New Zealand: Regulation Of Insurance Brokers In New Zealand

Last Updated: 25 November 2008
Article by Crossley Gates and Peter Leman

In late September 2008 the New Zealand Government passed the Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008. What do these two Acts mean for general insurance brokers in New Zealand?

The Financial Advisers Act 2008 (FAA) and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA) bear little resemblance to the early policy proposals contained in the Ministry's discussion documents.

When the Government first signalled its intention to increase the regulation of financial intermediaries, many expressed concern that the Government would go too far and create regulatory overkill. Unfavourable comparisons were made with the Australian regulatory environment. Ironically, some now wonder if the FAA and the FSPA went far enough!


The FAA regulates giving financial advice and making investment transactions in respect of 'financial products'. It divides all financial products into two categories: Category 1 products are seen as more complicated and risky to consumers and Category 2 products less so. A lower level of regulation applies to Category 2 products.

All general insurance policies and all life insurance policies (except for non-term life policies issued after 31 December 2008) are Category 2 products.


An insurance broker will be a 'financial adviser' governed by the FAA and will perform a 'financial adviser service' if he or she in the course of business and in relation to acquiring or disposing of any Category 1 or 2 product:

  • Makes a recommendation.
  • Gives an opinion.
  • Gives guidance.
  • Receives or handles money or other property on behalf of another person.

Thus, all insurance brokers are likely to be subject to the FAA. A person's duties would have to be confined to simply taking customer orders to avoid falling within the 'financial adviser' definition. We note that insurance company employees involved in direct sales are also likely to come within this definition.


As financial advisers in relation to Category 2 products, insurance brokers must be either:

  • Individually registered under the FSPA, or
  • An employee or agent of a qualified financial entity (QFE).

All individuals seeking registration will have to apply to the Registrar of Financial Service Providers. In order to qualify for registration, the individual must be a member of an approved dispute resolution scheme and not come within one of the ineligibility criteria set out in the FSPA.

It will be an offence not to be registered contrary to the FSPA. If convicted, an individual can be imprisoned for up to 12 months and fined up to $100,000.

The purpose of the register is to enable members of the public to access it to establish if an individual is registered and to see which dispute resolution scheme the registered individual belongs to. The register is likely to be available over the Internet.


An entity employing financial advisers or appointing financial adviser agents, can apply to the Securities Commission for QFE status. In order to qualify for that status, the entity must meet the following criteria:

  • Be registered under the FSPA.
  • Ensure its compliance, and its employees' and agents' compliance, with the terms and conditions of the grant of that status.
  • Ensure its employees and agents comply with their obligations as financial advisers.
  • Provide an annual report to the Securities Commission.

The purpose of QFE status is to avoid the need for all the entity's employees and agents who are financial advisers to be individually registered. Thus, banks selling insurance are likely to want to seek QFE status.


Insurance brokers must make disclosure to their clients in accordance with the Category 2 product disclosure requirements. Those disclosure requirements are to be prescribed in regulations which are yet to be passed. The FAA goes on to say any or all of the following information 'may' be so prescribed:

  • The fact that the adviser is registered.
  • The dispute resolution scheme the adviser belongs to.
  • The location of the business and the contact details.

The use of the word 'may' leaves room for doubt on whether the information prescribed in the regulations can be more extensive than this.

The most contentious issue in the early days was the proposal to require insurance brokers to disclose the amount of their commission entitlement to insureds. The drafting of the FAA may be sufficiently wide for this requirement to reappear at some later stage in the regulations. Time will tell.


Under the FAA, financial advisers must:

  • Exercise the care, diligence, and skill that a reasonable financial adviser would exercise in the same circumstances, taking into account (among other things) the nature and requirements of the financial adviser's client and the nature of the service performed for the client.
  • Not engage in conduct (or advertise in a way) that is misleading or deceptive or likely to mislead or deceive.


Both Acts apply to a financial adviser service performed by a person in New Zealand regardless of where that person is resident, incorporated or carries on business. Thus, the Acts provide no protection to the public in New Zealand dealing with overseas insurance brokers.


This proposed Bill is expected to regulate insurance brokers further. In particular, the Bill is expected to address the thorny issue of agency. The first draft of this Bill is not expected until midnext year.


The FAA and the registration requirements of the FSPA do not come into force until an unspecified future date. At least a two-year transition period is anticipated before insurance brokers will need to comply.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions