FMA's regulatory experiment yields real-world results and shapes a bolder fintech future
New Zealand's financial regulator has moved from experiment to execution, with the Financial Markets Authority releasing the results of its inaugural fintech regulatory sandbox pilot and laying out an ambitious two-year plan to reduce barriers for innovative firms — developments with real implications for mortgage brokers and their clients as the country's financial services landscape shifts.
The backdrop is a market already in motion: licensed financial advice providers rose 10% year-on-year to 1,553, financial advisers climbed nearly 9% to 9,197, and the number of clients receiving digital advice nearly doubled in a year — from around 86,500 to more than 164,800.
Launched in December 2024, the sandbox drew 24 expressions of interest — although not all fell within the FMA's regulatory remit — with six firms ultimately selected to test novel products in a controlled environment. By December, the FMA had granted its first sandbox exemption and licence, with at least one firm already live in the market.
What the sandbox revealed
The pilot surfaced friction points that will resonate with anyone working in financial services. Participants reported frustration with the cost and complexity of transitioning to full licensing, and the FMA acknowledged that "one-size-fits-all requirements for licensed entities are not always well suited to start-ups and can, in some cases, be prohibitive to entry."
Early-stage workshops proved particularly valuable — several firms were able to refine their business models within weeks rather than months, a pace that stood in sharp contrast to standard regulatory timelines.
All six participants rated the sandbox positively, citing better understanding of New Zealand's financial markets legislation and faster pathways to market as key benefits. The process also threw up substantive regulatory questions the FMA had not previously had cause to examine closely, including the treatment of virtual assets, the limitations of bare trust arrangements under the Depositor Compensation Scheme, and how Māori business models aligned with tikanga interact with existing financial markets law.
What comes next — and why brokers should pay attention
The FMA's forward plan is structured around four pillars: expanding its core fintech and innovation service, deepening domestic and international engagement, thematic exploration of virtual assets and artificial intelligence, and ecosystem education.
In the report, FMA Chief Executive Samantha Barrass (pictured) said the regulator intends to move "toward a more coordinated, transparent, and sustainable model for supporting innovation", with work to progress over the next 18 to 24 months.
For brokers, the most immediately relevant development is the establishment of an on-ramp licence — a proportionate pathway designed to help innovative firms reach market without needing to meet full licensing requirements from day one.
As new products emerge in areas like tokenised assets, group investment platforms, and digital banking alternatives, brokers are likely to field increasing questions from clients — particularly property investors and first-home buyers — about how these offerings interact with existing mortgage structures and borrowing capacity assessments.
The FMA's Innovation Hub drop-in service remains available for firms seeking early guidance, with the regulator encouraging applicants to seek independent legal advice before making contact.
See the FMA announcement here.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
