Skip to content

Product suitability and governance
Code CON-006
Domain Conduct
Owner Chief Risk Officer
Status Draft
Applicability Platform
Jurisdiction NZ + AU
Business domain BD04
Review date 2027-04-16

Regulations: NZ FMC Act · NCC Act 2009 (NCCP) · CCCFA 2003 · Corporations Act 2001

Purpose

This policy establishes the bank's obligations and standards for product eligibility, suitability assessment, product recommendations, product offers, and agent-initiated deals. It applies across all customer-facing product decisions — whether system-generated or agent-initiated — in both NZ and AU jurisdictions.

It is distinct from the responsible lending obligations covered by CRE-002 (which addresses affordability specifically for credit products). CON-006 addresses the broader question of product fit: whether a product is appropriate for a given customer's circumstances, needs, and existing relationship with the bank.

Scope

Applies to all products in the bank's product register. Applies to all channels: mobile app, web, phone, agent-assisted. Applies to both system-generated offers (MOD-108) and agent-initiated deals (MOD-109).

Obligations

  1. Eligibility gate — No product may be offered to, or applied for by, a customer who is not eligible under the product's eligibility rules. Eligibility is evaluated by MOD-105. The eligibility check is a hard gate — no manual bypass path. Regulatory basis: NZ FMC Act s 431C (fair dealing); AU Corporations Act s 912A (efficiently, honestly and fairly).

  2. Suitability assessment (light) — For standard retail products (transactional, savings, deposits, foreign currency), suitability is assessed as a structured eligibility check incorporating: CDD tier, credit risk rating, existing product holdings, total exposure, and customer tenure. No separate questionnaire is required for these products. For credit products, the responsible lending obligations of CRE-002 apply in addition.

  3. Financial advice licensing gate — Products that would constitute the giving of financial advice under NZ FMC Act Part 2 or regulated financial product advice under AU Corporations Act Ch 7 must be flagged requires_advice_review = true in the product register. No automated offer may be generated for such products without an authorised financial adviser review on record within the past 12 months. The current product register contains no such products; the gate is built and active for future use.

  4. ROTE-informed product governance — Each product has a configured ROTE hurdle rate. Products that fall below the hurdle rate for 90 or more consecutive calendar days must be reviewed by the product governance board within 30 days of the breach being flagged. The review must produce a documented outcome: reprice, restructure, or discontinue. System ROTE calculation is performed by MOD-106.

  5. Product recommendation audit trail — Every product recommendation — whether system-generated (MOD-108) or agent-initiated (MOD-109) — must be logged immutably with: party_id, product recommended, basis for recommendation, offer terms, channel, and lifecycle outcome (accepted, rejected, expired). Records retained for 7 years.

  6. Agent deal authorisation — Agent-proposed deal terms that exceed the agent's configured self-approval tolerance must be escalated to the configured approval tier before being presented to the customer. The authoriser's identity and rationale must be recorded. No deal may be presented to a customer without either self-approval or explicit approver confirmation.

  7. Consistent treatment — Periodic review of deal and offer outcomes by jurisdiction, customer segment, and agent must be performed at least quarterly. Systematic differences in offer rates or deal terms not explained by eligibility or risk factors must be investigated and remediated.

  8. Fairness monitoring — The NBP recommendation engine (MOD-107) output must be tested for demographic fairness at least monthly. Any product with a recommendation rate that differs by more than 10 percentage points across demographic groups triggers a compliance review.

Satisfaction modes

Obligation Mode Enforcing module
Eligibility gate GATE MOD-105
Suitability (light) GATE MOD-105
Financial advice gate GATE MOD-108
ROTE governance ALERT MOD-106
Offer audit trail LOG MOD-108, MOD-109
Deal authorisation GATE MOD-109
Consistent treatment LOG MOD-109
Fairness monitoring ALERT MOD-107
  • CRE-002 — Responsible lending (affordability for credit products)
  • CON-001 — Customer fairness and conduct
  • CON-003 — Vulnerable customer
  • CON-004 — Product disclosure and sales practice
  • PRI-001 — Customer data and privacy

Satisfying modules

Module Name Mode Description
MOD-105 Product eligibility engine GATE Every product offer or application is gated against the eligibility matrix — a customer not eligible for a product cannot be presented with it or apply for it.
MOD-106 ROTE engine CALC Computes product-level and customer-level ROTE as a governance input to product eligibility and pricing decisions — products persistently below hurdle are flagged for product governance board review.
MOD-107 Next best product engine CALC NBP recommendations are scoped strictly to the customer's eligible product set from MOD-105 — no product outside the eligibility matrix can appear as a next best product.
MOD-108 Product offer engine GATE No offer is generated for a product that is not in the customer's eligible set from MOD-105 — eligibility check is a hard pre-condition for offer generation.
MOD-109 Product deal engine GATE Agent-proposed deal terms are validated against product floor/ceiling rules and eligibility constraints before being presented to the customer — no deal outside configured tolerance can be authorised without the required approval tier.
MOD-153 Customer acceptance engine GATE Product suitability is evaluated as part of acceptance for retail credit products — a customer whose profile falls outside the product suitability criteria is referred, not silently passed.
MOD-155 Target Market Determination (AU DDO) AUTO Customer characteristics are automatically evaluated against the TMD target market criteria for each product sale; out-of-target-market distribution events are detected and recorded without manual review.

Part of Conduct · Governance overview Compiled 2026-05-22 from source/entities/policies/CON-006.yaml