FMA focussed on fraud and commissions paid to advisers

The Financial Markets Authority has laid out its plans for regulating financial over the next year and is targeting supervision of specific conduct risks.

In its Financial Conduct Report, released today, it has a number of priorities for the advice sector including conflicted remuneration and a new focus on fraud.

FMA Executive Director, Licensing and Conduct Supervision, Clare Bolingford, says the regulator has seen an increase in potential fraud across mortgages, insurance and KiwiSaver with the latter often related to mortgage fraud with first home withdrawals.

“We were getting some emerging insights that fraud was becoming more prevalent in the market, and certainly from the work that we've done, both with financial advice providers and also with banks and insurance companies have shown that it is increasing as an issue within the sector.

With insurance she says it is “misrepresentation in the process of either putting forward an application for insurance or indeed in the claims process.”
She says the advice community can support the detection of fraud.

”It's quite hard with fraud to actually find it, unless you're out there on the ground. So, what we're really looking for is support from providers themselves,” alongside its monitoring work.

“What I can’t tell you is how much there is out there,” she said. “But I can tell you that we are seeing evidence of fraud in the system.”

The biggest shift between last year’s report and this one is that the FMA has moved from identifying broad issues in the financial advice sector to targeted supervision of specific conduct risks, particularly commission conflicts, fraud and complaints management.
While commissions again appear in the section on financial advice Bolingford says the FMA is not anti-commissions.

“We do see a place for commission-based models in the advice sector,” she said. “We do think that a range of remuneration models support good access to advice, so it's not that we're saying commission itself, you know, is bad or we don't like it, but what we are concerned about is how the risks of conflicts or interests are being managed within remuneration models.”

She says the issue is that there is “a risk the customer's interest might not be put first, or that they end up with a product that isn't suitable for them because of particular types of commission-based structures.”

In particular she flagged upfront commissions as opposed to ones paid out over a period of time.

Comments from our readers

On 6 July 2026 at 3:12 pm Amused said:

Sorry but how can the FMA reference potential conflicts of interest been present regarding upfront commissions while it chooses to ignore the elephant in the room?

I am of course talking about the one well known FAP holder who is currently being allowed to run a business whereby they market & sell new-build properties on behalf of builders/developers and receive a commission/referral fee to find a buyer. This company in question should clearly NOT be operating a FAP licence which currently allows them to also arrange finance to purchase one of these properties above which they have a clear conflict of interest in recommending to clients. Likewise, any financial planning service or insurance advice provided to clients around their purchase of one of these properties should not be available. There is no law currently stopping people from been naïve when they come make an investment decision however the code of conduct for all FAP Licence holders clearly spells out the following for the benefit of all consumers whenever they speak to an adviser nowadays.

Key Principles & Standards

Client First: Always put clients' interests ahead of your own or your firm's.

Integrity: Be honest, candid, and act with professional integrity, managing conflicts.

Suitability: Provide advice that is suitable for the client's circumstances, ensuring they understand benefits/risks.

The company above actively markets itself to its clients as a “one-stop shop” which would seem to be the very definition of a conflict of interest. In fact, I am struggling to think of a more obvious one.

Why bother having a code of conduct for Financial Advice Providers if the chief regulator for our industry is going to allow this company to continue providing financial advice whilst a conflict of interest is clearly present.

On 6 July 2026 at 11:58 pm Paul Flood said:

@Amused – I didn’t understand the problem you had with Opes Partners back in December when they were censured by the FMA, and I still didn’t get it when I read your comment I am replying to.

But then I read your comment a few more times, and I think I know why I don’t feel the same way about the Opes conflicts. Perhaps it’s because we have different understandings of what a conflict of interest is? You appear to be questioning how the FMA can think that upfront commissions create potential conflicts of interest, while ignoring the very real conflicts of interest present in the Opes model.

One of the key findings of the FMA’s 2015-2018(ish) work on replacement business was that “most of the advisers we reviewed and interviewed failed to recognise that incentives create a conflict with the interests of their clients.” (From the March 2018 report)

The FMA is not saying that upfront commissions create potential conflicts. This is because, in every single case, they create an actual conflict of interest. (The same goes for any form of benefit received as payment from a provider.) When an adviser is getting paid by a lender/insurer/fund provider, they are always in the position of needing to identify and manage that conflict in a way that ensures the client’s interests are placed ahead of their own (or the FAP's).

Opes (as a group) has a greater number of conflicts to manage due to vertical integration and several business lines, but the conflicts are fundamentally the same: I/my FAP gets paid if and only if the client follows my advice to purchase [insert product]. Or so it seems to me.

On 8 July 2026 at 5:03 pm Amused said:

@ Paul Flood

As previously highlighted by other contributors Opes unashamedly promotes the sale of new-build homes as its core offering (with little or no acknowledgement of any further considerations). That is not financial planning, it is product sales and should be named as such. Over 30% of submissions to the Select Committee on FSLAA recommended that there be a categorical distinction between "sales" and "advice". In the Regulatory Impact Statement, MBIE chose to reject/ignore those recommendations, so we now have VIOs classed as providing financial advice - which they do not. I'm not against a product manufacturer distributing and selling its own products as we operate in a market economy but the distinction between product sales and financial advice should have been enshrined in legislation to protect and properly inform consumers with whom they are dealing. MBIE knew better.....

Opes are allowed to run a business whereby they market & sell new-build properties on behalf of builders/developers and receive a commission/referral fee to find them a buyer. They should not however be operating a FAP licence which currently also allows them to arrange mortgage finance for their clients to purchase one of these properties which they have a clear conflict of interest in recommending. Likewise, any financial planning service or insurance advice provided to clients around their purchase of one of these properties should not be available. When have Opes ever, ever said this asset class (property) may not be a good investment. Never. Conflict of interest 101.

MBIE have again got things wrong (the list is adding up) so the FMA needs to do the right thing by NZ consumers and cancel the above-mentioned company’s FAP licence. The code of conduct for all FAP Licence holders demands it.

On 8 July 2026 at 6:50 pm Paul Flood said:

@ Amused - When it comes to conflicts of interest, I don't see a significant distinction between sales (advising on a single product suite) and advice, funnily enough.

Sales: Buy this.

Advice: Here is a list of things I can sell you. I recommend that you buy this one.

What am I missing? Client's interests first?

Advice with client's interests first: Here is a list of things I can sell you. It is in your interest to buy this one.

End result: Something gets sold, and the salesperson/adviser gets paid (but not by the client/customer). The conflict is the same.

On 9 July 2026 at 9:01 am Backstage said:

Like Paul, I wasn't sure exactly what your point was Amused but reading the findings again and knowing their model which you explained very well Amused, I think this should be considered strongly.

Especially as you have an economist full out promoting this sales machine, unfortunately, the public place a lot of weight on these fortune tellers/story tellers. If we were to do the same as a Financial Adviser swinging in on 1 asset class, say crypto, we would be held to account.

It is a slick sales machine that sails on the line and maybe an anomaly that should be given more consideration. People get swept up emotionally and often overlook disclaimers which I am sure now they have all over the place.

Its half a degree off timeshare with a mortgage, insurance and property management machine clipping and clicking clients on the way.

My view of their long-term future as a model hasn't been firm, unfortunately its a flawed model despite the owners views.

On 9 July 2026 at 3:24 pm dcwhyte said:

@Amused and @Paul - Fair points made here by both. As stated, MBIE ignored the single most common submission made and advised the Select Committee to permit vertically integrated organisations to have sales people classed as providing financial advice.

This deprives the consumer of a clear and unequivocal appreciation of what is being presented them and by whom.

Appointed Representative is a meaningless term dreamed up by bureaucrats and has no definitive descriptive or explanatory merit.

Within the current licensing framework, Opes should have been classified as a class 4 licensee but, as has been pointed out, selling product (wholly permissable in a market economy) and providing financial advice are two separate and distinctive functions within the industry.

A lack of understanding of the industry by our employees in Wellington has created significant consumer risk - an issue I would have thought the regulator would be keen to address.

On 9 July 2026 at 6:49 pm Amused said:

@dcwhyte

Well said. There is significant risk to the consumer with the Opes model. This begs the question why the regulator is failing to do its job and address this risk for consumers.

The FMA cannot use a mistake made by MBIE as an excuse for its lack of action when it’s obvious the code of conduct for all FAP Licence holders prohibits what Opes are currently doing.

MBIE have a track record of not understanding industry or engaging with it properly, thinking that they know best. We saw this clearly with the initial CCCFA changes when they were introduced in late 2021. Opes is now another example of the same mistakes being repeated which ultimately see consumers being disadvantaged.

The apparent protection offered to NZ consumers by legalisation introduced into law by politicians will have been an absolutely pointless endeavour if Opes can be allowed to continue running a business whereby they market & sell new-build properties on behalf of builders/developers and receive a commission/referral fee to find them a buyer + then also operate a FAP licence which also allows them to arrange mortgage finance for their clients to purchase one of these properties which they have a clear conflict of interest in recommending. Likewise, the financial planning service or insurance advice provided to clients of Opes around their purchase of one of these properties should not be available.

With it been an election year I can think of a few opposition MPs who will now leap on the above poor mishandling by Wellington bureaucrats as these individuals ultimately represent the Government of the day.

On 10 July 2026 at 11:46 am Amused said:

@backstage

Just read your comment now. 100 percent in agreement with the points you have made. Again I believe the earlier ruling made by MBIE is incorrect & puts consumers at risk. It is not appropriate that Opes be allowed to hold a FAP licence for the obvious conflict of interest that exists for its financial advisers who currently operate under its licence. The FMA must take action. This industry is supposed to be focused now on ensuring good customer outcomes!

On 10 July 2026 at 2:11 pm dcwhyte said:

@Amused - I broadly agree. However, in a market economy, a product manufacturer should be allowed to distribute their own products.

In financial services industry terms, VIOs have a legitimate role to play but they should not be regulated under the same regime as Financial Advice Providers.

Intermediaries operating under a VIO structure should be permitted to do so under the CoFI legislation and not disguised as Financial Advisers.

I fail to understand how an intermediary operating under a legal Contract for Service can subordinate her employer's interests to any other party.

Hypothetically, if Westpac offered a superior term deposit rate, would an ANZ Bank retained intermediary with an inferior term deposit rate from their employer, refer a consumer enquiry to Westpac?

On 10 July 2026 at 6:04 pm Amused said:

Respectfully guys I think we may now be overthinking what we are talking about here regarding Opes & the appropriateness of them having a FAP licence. At the end of the day the Opes business model all revolves around one core thing - them finding a buyer for a builder/developer’s new-build property which Opes then receives payment for.

The buyer (client of Opes) has had the new-build property recommended to them as an appropriate investment strategy with little or no acknowledgement of any further considerations. The buyer 9 times out of 10 will require mortgage finance to secure ownership of the new-build property so by holding a FAP licence Opes receives additional remuneration for the home loan that is then borrowed by their client.

The Opes mortgage adviser has a conflict of interest in facilitating a home loan so that the above sale of the new-build property can proceed. Without the finance obtained by the Opes mortgage adviser Opes will not receive payment from the builder/developer.

Opes have tried to distance their mortgage advisers from this conflict of interest by paying them salaries but lender remuneration of mortgage advisers is done via commission payments. This commission payment received from the lender will initially be paid to the Opes mortgage adviser who originated the loan application on behalf of the borrower. Does anyone here honestly think that an Opes employee i.e. mortgage adviser is going to provide advice which potentially jeopardises the client electing to buy one of the new-build properties recommended by Opes? If a client of Opes located a new-build property (one that was not being recommended by Opes) what do we think the Opes Mortgage or insurance adviser is likely to say to that client? Which new-build property are they going to advise that client to buy?

dcwhyte has referenced “intermediaries disguised as financial advisers”. Well said. Again, Opes are perfectly entitled to be operating a business which sees them earn money from their clients purchasing one of the new-build properties they are recommending. They should not though be clipping the ticket on the transaction again by having in-house mortgage & insurance advisers all who have a vested financial interest in seeing the client complete the purchase of the new-build property that Opes is recommending. This is a clear conflict of interest for that adviser with the financial advice that they provide to the client. The code of conduct for all Financial Advice Providers is clear about this.

I think Backstage said it best above. The Opes model is half a degree off timeshare with a mortgage, insurance and property management machine clipping and clicking clients on the way. Just because MBIE didn’t see a conflict-of-interest present
it doesn’t mean MBIE were correct. MBIE as we have seen from the initial CCCFA changes introduced in late 2021 are far from being omniscient. The FMA needs to take action, and it is disappointing that this was not initiated when Opes were censured late last year for failing to comply with a number of obligations under their FAP licence.

“The Opes business model creates a risk of conflict of interest between the financial advice provider and the client, making adequate policies and procedures in this area, and the implementation of them, critical to appropriately managing this risk,” These were the comments from FMA executive director for response and enforcement Louise Unger at the time as reported by Good Returns. For the reasons which I have highlighted above I do not believe that managing this risk appropriately is possible. Opes unashamedly promotes the sale of new-build properties as its core offering. That is not financial planning, it is product sales and should be named as such. It is not appropriate for them to have a FAP licence.

FMA focussed on fraud and commissions paid to advisers

The Financial Markets Authority highlights fraud and commissions as key areas of attention over the next 12 months.

Tuesday, June 30th 2026, 6:24AM 10 Comments

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