A regulator that learned to say yes
New Zealand’s financial conduct regulator has spent the last decade adding rules. This week it did something different. In its second annual Financial Conduct Report, released on 30 June, the FMA formally named supporting innovation as a headline priority for 2026/27, sitting alongside consumer protection and its scam response.
FMA chief executive Samantha Barrass said the priorities include “improving access to financial advice, supporting innovation through our regulatory sandbox pilot, stepping up our response to scams, and taking strong enforcement action where misconduct has occurred”. For fintechs, fund managers and banks who have spent years navigating an expanding compliance maze, that is a meaningful shift in posture. The cop on the beat is starting to talk like a partner.
How regulation became the problem
The backstory matters. New Zealand’s conduct framework was built up aggressively through the Financial Markets Conduct Act 2013 and the 2022 conduct of financial institutions reforms. By the government’s own admission, the cost outran the benefit. An August 2024 Regulatory Impact Statement acknowledged the reforms had improved conduct outcomes but also created a complex, costly regulatory landscape with unnecessary compliance burdens.
That triggered a broad financial services reform package, launched by MBIE in early 2024 and approved by Cabinet in September that year. The FMA’s pivot is running in parallel. In June 2025, the inaugural Financial Conduct Report first flagged red tape reduction as a priority, and the regulator’s own innovation report set out a medium-term approach built on being “proportionate, adaptive, and focused on the outcomes that matter most”.
The sandbox actually worked
This is not just rhetoric. The FMA’s regulatory sandbox pilot has produced real outcomes. Of six firms that entered, four identified a pathway to market for products that regulatory uncertainty would otherwise have blocked. In December 2025 the FMA granted its first sandbox licence and saw its first firm exit to market.
The sharpest example for the digital asset sector was the ruling that Easy Crypto’s non-yielding stablecoin was not a financial product under the FMC Act. That is the kind of regulatory clarity call crypto operators have been begging for, and it sets a live precedent.
The on-ramp licence is the real prize
The sandbox does not scale, and the FMA knows it. It is now scoping a restricted or “on-ramp” licence, a lighter-touch entry point that firms can upgrade as they grow, and it can introduce this under existing powers without new legislation. The detail that should temper the optimism is that none of the rules have been published yet. No capital requirements, no client limits, no monitoring arrangements. Whether the on-ramp licence is genuinely useful or a PR exercise depends entirely on numbers that do not yet exist.
The tightrope, and the other side of the ledger
The FMA is not abandoning consumers, and the data shows why it cannot. Its 2025 report found only 29% of New Zealanders are confident they know what to do if treated unfairly by a financial provider, while reported investment scam losses hit $194 million in the year to September 2024, a figure the FMA believes is heavily under-reported. Innovation support and scam response sit side by side in the 2026/27 priorities precisely because the regulator is walking a tightrope.
The government is aligned. The FMA’s May 2026 response to the Minister’s Letter of Expectations confirmed positive feedback on the sandbox expansion, which matters for continuity.
What businesses should watch
The biggest risk is leadership. Barrass, who drove this cultural shift, will not seek reappointment as chief executive. Embedding innovation in two consecutive public reports gives the institution a paper trail, but regulatory culture is set at the top, and the next CEO will decide how aggressively these tools get used.
For banks and insurers, the single conduct licence pathway is the line item that touches compliance costs directly. For fund managers, expect continued scrutiny of product design and remuneration conflicts even as the broader burden is trimmed. For fintechs and digital asset operators, the published on-ramp rules are the document that will reveal whether this is a genuine opening or a friendly press release. Watch for the numbers.
Sources
- Financial Markets Authority to prioritise supporting innovation (2026-06-30)
- Removing red tape key priority for FMA – report (2025-06-25)
- FMA Expands Sandbox To Offer Wider Support For FinTech Firms
- Supporting innovation in New Zealand’s financial markets (2025-06)
- FMA floats fast-track fintech licence (lite), token comments
- From sandbox to market: FMA’s fintech push gathers pace
- 2025 Financial Conduct Report (2025-06)
- FMA response to Minister Letter of Expectations 2026 (2026-05-30)