By: Antony Holden, Caroline Laband, Michael Cavanaugh and Sophia Lynch

After the success of the first edition of the D&O, Financial Institutions and Regulatory Update, released in May, we’re excited to share the May to September update for 2026.

The aim of these regular updates is to help you stay ahead of fast-moving changes. This snapshot distils the decisions, enforcement action and reform momentum that we think might matter most.

We hope this information helps you anticipate risk, sharpen governance and act early to avoid any issues.

In this issue

  • The High Court dismisses confidential information claims and clarified duties directors owe to their company in transitional stages of their directorship, highlighting issues with confidential information, director duties, and proving loss from missed commercial opportunities.
  • The Court of Appeal considered when a company’s debts may be due, where timing is critical for setting aside transactions proximate to the company’s cashflow insolvency.
  • Reserve Bank Action over Co-operative Bank AML Failures with a proposed penalty of NZ$1.425 million
  • The High Court found ANZ liable for breaches of consumer credit disclosure requirements in a class action of mortgage customers with potential liability of approximately NZ$125 million.
  • Heartland Bank and TSB have agreed to merge in a NZ$620 million transaction, creating TSB Heartland Bank.
  • The High Court ruled jurisdictional objections raised by offshore gambling operators must be determined before substantive claims can proceed.
  • The High Court ordered ASB to pay a record NZ$6.73 million penalty for seven admitted breaches of the AML/CFT Act.
  • CityFitness was fined NZ$1.2 million for misleading customers about its membership pricing.
  • The Auckland High Court approved a NZ$10.9 million settlement in a class action against truck manufacturer and distributor Hino for falsifying fuel efficiency and emissions testing data.
  • More than NZ$90 million in refunds secured for consumers through settlement with lenders that breached the Credit Contracts and Consumer Finance Act (CCCFA).
  • The FMA outlined its expectations for insurers ahead of the Contracts of Insurance Act, which comes into force on 15 November 2027.
  • The High Court approved a litigation funding agreement for a derivative action brought by minority shareholders on behalf of Drylandcardon-related companies.
  • The High Court held QBE could not rely on the policy’s personal profit exclusion to deny a further NZ$1 million of D&O cover to former Mainzeal director.
  • The English Commercial Court held D&O insurers could not avoid cover for former Petrofac executives facing bribery charges.

The detail

Rascals v Taylor: High Court Dismisses Confidential Information Claims

  • The High Court clarified duties directors owe to their company in transitional stages of their directorship, particularly on the use of information that may assist the company’s competitors, and where there is alleged diversion of corporate opportunities.
  • While finding Mr. Taylor owed duties through to his last registered day as a director, against informal understandings as to his diminished role, the Court dismissed claims that Mr. Taylor improperly shared confidential information with a competitor.
  • Much of the information at issue was held to be publicly available or consistently treated by Rascals as non-confidential.  The other information was information personal to Mr. Taylor; his general industry know-how.
  • The Court also dismissed claims against the competitor, as there was no evidence that it knew of, or was willfully blind to, any alleged breach of confidence.
  • The decision highlights issues with confidential information, director duties, and proving loss from missed commercial opportunities.

Alpha Insurance A/S (in liq) v Johnstone: Insolvency and CBL

  • The Court of Appeal has considered when a company’s debts may be due, where that timing is critical for setting aside transactions proximate to the company’s cashflow insolvency under s292 Companies Act.
  • CBL was a licensed reinsurer, under the Reserve Bank of New Zealand’s prudential supervision, which in the two weeks prior to its liquidation by the RBNZ transacted with a ceding insurer (Alpha) for around €25 million.  Liquidators sought to set these transactions aside under s292, as made when CBL was allegedly cashflow insolvent.
  • CBL was undoubtedly balance sheet insolvent.  However, whether it was cashflow insolvent (and triggering s292) turned on when its debts were due – notably, the actuarially assessed outstanding claims liabilities.  OCL are inevitably “due”, though indeterminably so.
  • The Court of Appeal strictly interpreted and applied s292, because the prudential requirements for insurers modified other provisions of the Companies Act on an insurer’s solvency but did not modify s292.
  • CBL was, therefore, not cashflow insolvent at that time.  The transactions could not be recovered.

Reserve Bank Action Over Co-operative Bank AML Failures

  • The Reserve Bank of New Zealand has filed High Court proceedings against the Co-operative Bank for alleged AML/CFT compliance failures dating back to at least 2020.
  • The parties have jointly proposed a penalty of approximately NZ$1.425 million, subject to court approval.
  • The alleged breaches relate to ineffective transaction monitoring, inadequate testing of monitoring systems, and insufficient record keeping.
  • The Bank has admitted liability and says the issues reflect historical compliance weaknesses.
  • The proceedings focus on deficiencies in compliance systems rather than allegations of actual money laundering or customer harm.

ANZ to Appeal High Court Ruling in NZ$125m Mortgage Disclosure Class Action

  • The High Court found ANZ liable for breaches of consumer credit disclosure requirements in a class action involving thousands of mortgage customers.
  • The claims relate to incorrect or inadequate mortgage lending disclosures.
  • ANZ estimates its maximum potential liability at approximately NZ$125 million.
  • ANZ has appealed the decision, arguing the Court’s interpretation of the legislation is incorrect and disproportionate to any consumer harm.

Heartland Bank to Acquire TSB in NZ$620m Merger

  • Heartland Bank and TSB have agreed to merge in a NZ$620 million transaction, creating TSB Heartland Bank.
  • The merger is intended to strengthen competition with the major banks, particularly in regional New Zealand.
  • The combined business will bring together Heartland’s specialist lending capability and TSB’s retail banking and funding base.
  • The transaction remains subject to regulatory and shareholder approvals and is expected to complete by year-end.

Court Rules Jurisdiction Challenge Must Be Decided First in Gambling Class Action

  • The High Court ruled jurisdictional objections raised by offshore gambling operators must be determined before substantive claims can proceed.
  • The class action against operators including Bet365 and Super Group has therefore been paused.
  • Plaintiffs allege breaches of New Zealand gambling laws arising from offshore operators targeting New Zealand customers.
  • The decision confirms jurisdiction is a threshold issue that may determine whether the proceeding can continue in New Zealand.

ASB Hit with Record NZ$6.7m AML Penalty for Compliance Failures

CityFitness Fined NZ$1.12m for Misleading Membership Pricing Claims

  • CityFitness was fined NZ$1.2 million by the Auckland District Council for misleading customers about its membership pricing.
  • The gym advertised memberships at $6.99 per week, but also charged a compulsory 3% transaction fee that was not included in the advertised price.
  • The Commerce Commission found the pricing was misleading because the additional fee was unavoidable and therefore the advertised price was not genuine.
  • Around 125,000 customers were affected, with the fee generating approximately NZ$1.6 million in additional revenue for CityFitness.
  • CityFitness admitted eight breaches of the Fair Trading Act, reinforcing the importance of clear and accurate pricing disclosures to consumers.

High Court Approves NZ$10.9m Hino Class Action Settlement

  • The Auckland High Court has approved a NZ$10.9 million settlement in a class action against truck manufacturer and distributor Hino.
  • The claim was followed Hino’s admission it had falsified fuel efficiency and emissions testing data.
  • The proceedings alleged customers may have overpaid for affected vehicles because accurate information was not disclosed.
  • The settlement provides compensation to eligible Hino truck owners and lessees and brings the litigation to an end.
  • The lead plaintiffs will each receive NZ$6,000, with the balance of the settlement fund to be distributed among eligible class members.

Commerce Commission Secures NZ$90m in Refunds for Consumers

  • The Commerce Commission has helped secure more than NZ$90 million in refunds for consumers through settlement with lenders that breached the Credit Contracts and Consumer Finance Act (CCCFA).
  • The refunds resulted from enforcement action against financial institutions that failed to meet their obligations under consumer credit laws.
  • The Commission recently reached three additional settlement agreements with banks, adding to its broader consumer remediation programme.
  • The CCCFA imposes strict disclosure and responsible lending requirements designed to protect borrowers.
  • The Commission said the refunds highlight the value of active regulatory oversight and provide meaningful redress for consumers affected by non-compliant lending practices.

FMA Set Expectations for Insurers Ahead of Contracts Insurance Act Reform

  • The FMA has outlined its expectations for insurers ahead of the Contracts of Insurance Act, which comes into force on 15 November 2027.
  • The Act introduces significant reforms aimed at improving fairness, transparency, and consumer confidence in insurance contracts.
  • It replaces broad disclosure obligations with a requirement for consumers to take reasonable care not to make a misrepresentation and introduces more proportionate remedies.
  • The FMA expects insurers to begin implementation planning now, including reviewing processes and identifying compliance gaps.
  • The regulator has warned against delaying preparations and stressed the importance of clear communication with customers.

Drylandcarbon Derivative Action: High Court Approves Litigation Funding Agreement

  • The High Court approved a litigation funding agreement for a derivative action brought by minority shareholders on behalf of Drylandcardon-related companies.
  • The claims are against former directors and related entities, with earlier courts finding the underlying claims sufficiently strong to justify pursuit.
  • The Court held it has jurisdiction under the Companies Act 1993 to approve litigation funding arrangements in derivative proceedings.
  • The funding arrangement enables the litigation to proceed while reducing the financial risk to the plaintiff companies.
  • In a subsequent 2026 judgement, the High Court confirmed the derivative action can continue through the appeal process without fresh shareholder leave and existing costs orders remain in place.

Mainzeal v QBE Insurance (International) Ltd: High Court Rejects Reliance on Personal Profit Exclusion

  • The High Court held QBE could not rely on the policy’s personal profit exclusion to deny a further NZ$1 million of D&O cover to former Mainzeal director Richard Yan.
  • The Court found there had been no final determination Mr. Yan obtained a personal profit or advantage to which he was not legally entitled.
  • QBE was therefore required to provide the additional cover available under the policy.
  • The Court dismissed a separate claim QBE was required to indemnify Mainzeal for GST payable on insurance proceeds received under the statutory charge regime.
  • The decision highlights insurers face a high threshold when relying on personal profit exclusions and clear policy wording is required to exclude cover.

Liberty Managing Agency Ltd v Chedid & Salibi: Insurers Required to Advance Criminal Defence Costs

  • The English Commercial Court held D&O insurers could not avoid cover for former Petrofac executives facing bribery charges where the alleged fraud and non-disclosure had not been established by a final court decision or formal admission.
  • The Court found the policy’s non-avoidance clause prevented insurers from relying on allegations of fraud alone to refuse cover.
  • The Court rejected the insurers’ argument public policy prevented indemnity for defence costs arising from bribery allegations that remained unproven.
  • The insurers were ordered to advance defence costs as incurred in accordance with the policy.

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