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Are the Outputs from AI Tools Aligning with Kiwi Financial Guidance Regulations?
Thursday, December 11th, 2025, 7:42 AM | 1 Comment
Imagine chatting with a smart AI bot for quick money tips—sounds handy, right? But hold on: popular generative AI assistants might be crossing legal lines under New Zealand's Financial Markets Conduct Act (FMCA), which sets strict rules for who can offer financial advice and how. This insight comes from Tim Williams, a partner at law firm Chapman Tripp, who shared his thoughts with more than 450 members of the Insurance Brokers Association of New Zealand (IBANZ) during their yearly update on insurance laws.
In simple terms, the FMCA is like a safeguard that ensures anyone giving financial advice—whether it's suggesting investments or planning your savings—has the right qualifications and follows ethical standards to protect everyday people from bad decisions. Williams is calling on the Financial Markets Authority (FMA), New Zealand's financial watchdog, to take a close look at whether our current laws are keeping pace with how fast AI is evolving. For beginners, think of AI chatbots like advanced search engines that can create responses on the fly, but without human oversight, they might spit out advice that's not tailored or safe.
"The FMA needs to check if today's rules are handling the explosion in AI tech properly," Williams noted. "If they're falling short, we have to figure out how to let regular folks get helpful money info without exposing them to the dangers of dodgy suggestions that skip the FMCA's built-in protections—like duties to act in your best interest." This balance is crucial because, on one hand, AI could democratize access to financial knowledge; on the other, it risks misleading people who aren't experts.
Backing Williams up is Katherine Wilson, the head of IBANZ, who has already flagged this to the FMA. The FMA is currently working on ways to make sure all New Zealanders can get reliable financial guidance. IBANZ represents thousands of trained professionals in the insurance and advice world, and they run robust training programs to keep their members sharp and delivering top-notch service. For example, these programs cover everything from risk assessment to client communication, ensuring advice is personalized and accurate.
"Our members rely on several thousand certified financial experts," Wilson explained. "Through our detailed ongoing education initiatives, we make sure they're ready to offer excellent guidance. That said, we're wary of the hit-or-miss nature of AI-generated advice and the real damage that false or confusing info could do to people's finances. That's why we've brought this to the FMA's attention—it's a key topic for them to tackle." And this is the part most people miss: while AI promises speed and convenience, it often lacks the nuance a human adviser brings, like understanding your unique life situation.
Williams broke it down further: in New Zealand, AI bots are generally okay for sharing straightforward facts, discussing broad categories of financial products (like "what are bonds?"), or relaying advice from licensed experts. But here's where it gets controversial... if you nudge these tools just right, many big-name chatbots will dive into specifics, like recommending a particular stock or fund. That kind of personalized nudge? It demands a proper license and adherence to a bunch of responsibilities under the law.
This isn't just a minor glitch—it's a big deal politically because folks using AI for financial pointers would miss out on the robust FMCA safeguards, such as fair dealing and clear disclosures. Williams' warning echoes similar worries down under in Australia, where regulators are scrutinizing AI bots that dish out stock trading ideas, questioning if they're fit for purpose or just a recipe for regret.
To spell it out plainly: if an AI system, as part of its regular operations, suggests a product to everyday customers, shares views on investments, crafts a custom savings strategy, or offers detailed planning without being licensed, it's essentially providing financial advice illegally under New Zealand's existing framework. Williams pointed out that the FMA has previously offered solid pointers on 'robo-advice'—automated tools that give guidance—which stress the necessity of a provider license and meeting other obligations when targeting retail clients. Robo-advice, for the uninitiated, is like a digital version of a financial planner, but it must still play by the rules to avoid pitfalls like biased algorithms.
But it doesn't stop there. Williams urged financial pros in the audience to watch out when incorporating AI into their own work. If they lean on generative AI to shape their client recommendations but can't show their records prove it was a smart, justified choice, they could violate the Code of Professional Conduct. This code is essentially a set of ethical guidelines that demand transparency and accountability in advice-giving.
"It's vital for members to strip personal details out of their AI queries," he added, "so that only approved team members at licensed firms can view sensitive client data, in line with the code's privacy standards." For instance, instead of inputting a client's full financial history, you'd use generalized scenarios to get ideas, then apply human judgment.
Tags: AI (https://www.goodreturns.co.nz/tags/AI) | Tim Williams (https://www.goodreturns.co.nz/tags/Tim+Williams)
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Lender | Floating | 1 Year | 2 Years | 3 Years
AIA - Back My Build | 3.34 | - | - | -
AIA - Go Home Loans | 5.89 | 4.49 | 4.49 | 4.79
ANZ | 5.69 | 5.09 | 5.09 | 5.39
ANZ Blueprint to Build | 7.39 | - | - | -
ANZ Good Energy | - | - | - | 1.00
ANZ Special | - | 4.49 | 4.49 | 4.79
ASB Bank | 5.79 | 4.49 | 4.49 | 4.79
ASB Better Homes Top Up | - | - | - | 1.00
Avanti Finance - Near Prime | 6.35 | - | - | -
Avanti Finance - Specialised | 7.55 | - | - | -
Basecorp Finance | 6.35 | - | - | -
Lender | Floating | 1 Year | 2 Years | 3 Years
BNZ - Classic | - | 5.99 | 5.69 | 5.69
BNZ - Mortgage One | 5.94 | - | - | -
BNZ - Rapid Repay | 5.94 | - | - | -
BNZ - Std | 5.84 | 4.49 | 4.49 | 4.79
BNZ - TotalMoney | 5.94 | - | - | -
CFML 321 Loans | â–¼3.95 | - | - | -
CFML Home Loans | â–¼6.05 | - | - | -
CFML Prime Loans | â–¼6.25 | - | - | -
CFML Standard Loans | â–¼6.95 | - | - | -
China Construction Bank | 6.44 | 4.85 | 4.95 | 4.95
China Construction Bank Special | 6.44 | 5.85 | 5.95 | 5.95
Lender | Floating | 1 Year | 2 Years | 3 Years
Co-operative Bank - First Home Special | - | 4.35 | - | -
Co-operative Bank - Owner Occ | 4.99 | 4.45 | 4.49 | 4.79
Co-operative Bank - Standard | 4.99 | 4.95 | 4.99 | 5.29
Credit Union Auckland | 7.70 | - | - | -
First Credit Union Special | - | 4.79 | 4.95 | -
First Credit Union Standard | 6.49 | 5.39 | 5.55 | -
Heartland Bank - Online | 5.30 | 5.89 | - | -
Heartland Bank - Reverse Mortgage | 7.99 | - | - | -
Heretaunga Building Society | 7.45 | 5.90 | 5.80 | -
ICBC | 5.39 | 4.25 | 4.59 | 4.79
Kainga Ora | â–¼5.69 | â–¼4.49 | â–¼4.49 | â–¼4.79
Lender | Floating | 1 Year | 2 Years | 3 Years
Kainga Ora - First Home Buyer Special | - | - | - | -
Kiwibank (http://www.kiwibank.co.nz/) | 5.65 | 5.39 | 5.39 | 5.65
Kiwibank - Offset | 5.65 | - | - | -
Kiwibank Special | 6.15 | 4.49 | 4.49 | 4.85
Liberty | 6.65 | 6.55 | 6.22 | 6.20
Nelson Building Society | 6.49 | 4.59 | 4.59 | -
Pepper Money Near Prime | 6.55 | - | - | -
Pepper Money Prime | 5.99 | - | - | -
Pepper Money Specialist | 8.00 | - | - | -
SBS Bank | 5.84 | 5.09 | 5.09 | 5.39
SBS Bank Special | - | 4.49 | 4.49 | 4.79
Lender | Floating | 1 Year | 2 Years | 3 Years
SBS Construction lending for FHB | 3.74 | - | - | -
SBS FirstHome Combo | 3.29 | 4.29 | - | -
SBS FirstHome Combo | - | - | - | -
SBS Unwind reverse equity | 7.99 | - | - | -
TSB Bank | 6.59 | 5.19 | 5.29 | 5.59
TSB Special | 5.79 | 4.39 | 4.49 | 4.79
Unity First Home Buyer special | - | 3.99 | - | -
Unity Special | 6.39 | 4.49 | 4.65 | -
Unity Standard | 6.39 | 5.29 | 5.45 | -
Wairarapa Building Society | 6.15 | 4.59 | 4.59 | -
Westpac | 5.89 | 5.09 | â–²5.35 | â–²5.65
Lender | Floating | 1 Year | 2 Years | 3 Years
Westpac Choices Everyday | 5.99 | - | - | -
Westpac Offset | 5.89 | - | - | -
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Median | 5.99 | 4.59 | 4.85 | 4.85
Updated as of: 10 December 2025, 7:46 AM
But wait, is AI the villain here, or could it be a game-changer if regulated right? What do you think—should we embrace AI advice with tweaks to the law, or stick to human experts? Drop your take in the comments below: agree with Williams' call for investigation, or do you see AI as harmless fun? Let's spark a debate!
