New Zealand's Financial Markets Authority (FMA) will focus on ensuring that banks and non-bank deposit takers prioritize consumer needs when developing new products or redesigning existing ones while keeping in mind the capabilities and limitations of their systems and processes, according to FMA's Financial Conduct Report published on Tuesday.

The report sets out the watchdog's regulatory priorities for the 2026 to 2027 financial year, covering specific sectors and cross-sector themes.

FMA acknowledged that financial institutions review products and services, with most doing so both reactively and proactively. But in some cases, the absence of negative reporting is taken as confirmation that consumers are being treated fairly. It also saw cases where communication with consumers about changes to products and services following reviews was inconsistent.

The regulator plans to increase its understanding of how banks and non-bank deposit takers ensure that their provision of transaction account services complies with the fair conduct principle and minimum fair conduct program requirements over the next 12 months.

It said it would engage with banks and non-bank deposit takers to understand how complaints data is used. The regulator's focus is on ensuring that boards and executives regularly use the themes and trends in complaints data as an input into decisions to improve product and service offerings.