Prohibiting certain incentives – MBIE consultation on an exposure draft

The Ministry of Business, Innovation and Employment (MBIE) have released a consultation for draft regulations to prohibit certain incentives.

MBIE are seeking feedback on an exposure draft of regulations under the Financial Markets (Conduct of Institutions) Amendment Act 2022 regarding the prohibition on certain incentives.

• Exposure draft regulations on sales incentives
  Deadline: 9 November 2022, 5pm

While these regulations directly impact banks, insurers, and non-bank deposit-takers, it also specifically includes their intermediaries, so all FAPs will be caught.

The draft regulations do not prohibit linear incentives, such as simple commission. They do prohibit incentives based on targets or thresholds (by volume or value) of services or products. For example, they would prohibit higher commission rates for higher volumes of sales, and bonuses for reaching a target volume of financial advice provided.