The New Zealand government is preparing to introduce an increase in penalties for breaches of the Fair Trading Act, a move that will affect businesses across the insurance and financial services sectors. The proposed legislative changes, announced by Minister for Economic Growth Nicola Willis and Minister of Commerce and Consumer Affairs Scott Simpson, are intended to deter misleading advertising and other unfair trading practices.
Under the forthcoming legislation, the maximum financial penalties for violating the Fair Trading Act will be raised. For companies, the highest penalty will be set at the greater of $5 million, three times the value of the commercial gain, or the value of the transactions involved. Individuals could face fines up to $1 million. These changes are expected to be brought before Parliament early next year.
Willis said: “Once the changes take effect, serious offenders will be liable for fines of up to tens of millions of dollars if they have gained significant amounts from breaching the law.” She explained that the current penalty framework sometimes allows businesses to profit from non-compliance, but the new approach aims to remove such incentives.
The move comes as fair trading complaints have risen. Over the past five years, the Commerce Commission has recorded an almost 23% increase in complaints, with more than 48,000 received between July 2020 and July 2025. Issues reported include misleading advertising, incorrect pricing, and disputes over refunds and subscriptions. Repeat offenders have been a concern under the existing regime.
Recent enforcement actions have resulted in charges against two Pak’nSave supermarkets, which pleaded guilty to 18 counts of misleading pricing, and Woolworths, which faced 14 similar charges. The government has stated that higher penalties are intended to address compliance issues among businesses.
Simpson commented: “While the vast majority of businesses are law abiding, the current penalties and legal thresholds make it too difficult to hold repeat offenders to account. These changes will ensure the law provides stronger incentives to comply and stronger consequences for those who don’t.”
The Commerce Commission has expressed support for the government’s initiative. In a public statement, the commission said: “The government’s decision to strengthen penalties under the Fair Trading Act is a welcome step that supports our efforts to protect consumers and promote fair competition between businesses. We’ve long called for higher penalties under the act because fines had become little more than a ‘cost of doing business’ for some. When misleading conduct leads to profits that outweigh the penalties, that’s a problem.”
The reforms will also shift most breaches from a criminal to a civil liability regime, making it easier for the Commerce Commission to pursue cases. However, serious or intentional violations – such as demanding payment without intent to supply or obstructing enforcement – will remain criminal offences.
The government has decided not to move forward, at this stage, with proposals to prevent directors from insuring or indemnifying themselves against penalties, nor to expand infringement fees or unfair contract terms provisions. The proposed changes will undergo public consultation through the select committee process, with new laws expected to take effect later next year.
Insurance professionals are advised to review their compliance practices in anticipation of the new enforcement landscape, as the sector faces increased scrutiny and potentially higher financial consequences for breaches of fair trading laws.
