May 8, 2018
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry appears to be having a direct flow-on effect into the New Zealand financial advice sector.
Rob Everett, Chief Executive of the NZ regulator, Financial Markets Authority (FMA), and Reserve Bank of New Zealand Governor, Adrian Orr, have jointly given NZ banks a deadline to demonstrate their operations are not rife with conduct and culture issues coming to the fore in the Australian market.
The regulators sent a letter to the chief executives of the banks and the New Zealand Bankers’ Association (NZBA) last Thursday, who have until 18 May to show the FMA that they, “…have obtained assurance that misconduct of the type highlighted in Australia is not taking place here”.
“We expect you to show us what you have done in order to be comfortable that there are no material conduct issues within your business,” the letter stated.
“…the window for you to demonstrate to consumers, regulators and other stakeholders that they can have full confidence in the financial services industry in New Zealand is narrow, and we encourage proactive leadership from the retail Banking sector,” it continued.
It stated that an open invitation from banks to the regulators to go and look at their operations would not suffice.
Following issues revealed to the Australian Royal Commission a flood of opinions have been reported in New Zealand media on whether a similar examination should take place into banking practices in the latter country.
The Bank of New Zealand and New Zealand Commerce Minister, Kris Faafoi have both indicated they see no reason for a banking enquiry in New Zealand, and Prime Minister Jacinda Ardern said she is watching the Royal Commission in Australia closely.
FIRST Union, the Union for finance sector workers, has said it welcomes the New Zealand regulators looking into the operations of the banks and has called for a Royal Commission into local banking practices like that in Australia.
“A similar enquiry in New Zealand is necessary for the public to be assured that our Banks are not engaging in the same behaviour as their Australian parents,” said the Union’s National Finance Sector Organiser, Stephen Parry, referring to the ‘Big Four’ Australian banks being the parent companies of ANZ, ASB, BNZ and Westpac in New Zealand.