New Zealand’s central bank and Financial Markets Authority so far haven’t seen any evidence of “systemic and widespread” misconduct in a review of New Zealand banks, FMA chief executive Rob Everett told parliament’s Finance and Expenditures select committee.
“On the work to date, before the current scenario, I would say we’ve seen plenty that we think can and should be done better, but we have not seen evidence of systemic and widespread misconduct,” Everett said. There is “very little that would either constitute a breach of the law, or would require us to come up with a really urgent response,” he said.
The New Zealand review was launched after a Royal Commission inquiry in Australia started highlighting less than honourable practices from some banks’ Australian parents, something Everett said was alarming and immediately raised questions about whether there was similar conduct taking place here, given that the bulk of the sector is in the hands of the same banks.
Also “our concern about the Royal Commission’s s impact on confidence in our financial institutions and the risk of complacency in the New Zealand industry to these culture and conduct issues led us to respond,” the regulators said.
While so far the New Zealand regulators do not think a similar commission of inquiry is warranted here “the work we have initiated may test this view,” the FMA and the RBNZ said.
So far, the regulators have met with 16 chief executives of New Zealand banks, including the four major Australian-owned banks and sought assurance that the issues identified in Australia were not evident in New Zealand.
They then wrote to 10 locally-incorporated New Zealand banks with major retail operations on 3 May, initiating a “review of conduct and culture by New Zealand financial services entities”.
Everett said “we really challenged them to front up and confirm they didn’t believe their business contain any of the misconduct we have seen in Australia and then we challenged them to explain why they reached that conclusion, what work they have done to give them that confidence,” said Everett.
A total of 11 banks responded and those responses are being worked through by a joint working group of FMA and RBNZ staff. The Commerce Commission is also reviewing anything relevant to its role.
According to the FMA and the RBNZ, the banks have taken the exercise seriously, providing some very detailed responses. Following the initial assessment, the regulators will be requesting further information and verification where necessary, he said.
The regulators have also written to 15 major life insurance companies, requesting a response by June 22. They are anticipating putting out a report in October.
The Australian Royal Commission is expected to put out an initial report in September and a final report in February.