New Zealand regulators are seeking assurances that local lenders aren't involved in the same unethical behaviour involving financial planners that have been exposed in Australia's banking inquiry.
The Financial Markets Authority and Reserve Bank of New Zealand (RBNZ) spoke with the heads of New Zealand’s major banks earlier this week, telling them to provide evidence that they’re not engaged in practices unearthed by the Royal Commission in Australia, reports Bloomberg citing an RBNZ spokesman confirmed.
In Australia, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has learnt of misconduct by banks and wealth management companies that include charging customers for financial advice that was not provided, collecting fees from the accounts of dead people and forging customers' signatures. New Zealand’s four biggest banks are units of Australian banks, which together hold about 90% of deposits in the New Zealand financial system. The wealth management units of the banks were reported to have engaged in misconduct in Australia .
"We’ve asked them to provide reassurances to us that they have scrubbed their business models, and they have a basis for being confident that those issues don’t exist here," FMA Chief Executive Rob Everett told Radio New Zealand, which first reported the news. “We’ll be testing some of what they show us to make sure that we think it really stacks up.”
Mr Everett said there was no need for a public inquiry in New Zealand “at this point”. While there are things that could be improved, “we haven’t seen systemic evidence along the lines of what’s been highlighted in Australia”, he told Radio NZ.
RBNZ Governor Adrian Orr has said that New Zealand doesn’t need to hold a similar inquiry because its banking culture “is infinitely better” than Australia’s.
The banks were given a fortnight to return to the RBNZ and FMA with initial evidence of the efforts they had made to "scrub" their businesses for any signs of practices like those identified in Australia, and whether and what further initiatives were planned in that regard.