The Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) on Wednesday briefed the Finance and Expenditure Select Committee on the Australian Royal Commission (RC) into Misconduct in Banking, Superannuation and Financial Services Industry, and the response by regulators in New Zealand.
The Australian RC was established last December in response to a series of known, misconduct incidents widespread within financial services over a lengthy period.
The RC is expected to issue an initial report in September 2018 and a final report, with recommendations, by February 2019.
New Zealand regulators have been monitoring the RC since it was initiated, and have discussed matters with Australian regulators on a number of occasions.
The FMA has been implementing and supervising conduct regulation in NZ since the passing of the Financial Markets Conduct Act in late 2013. This was followed by the publication of the FMA Conduct Guide in February 2017.
“Our concern about the RC’s impact on confidence in our financial institutions and the potential for complacency in the New Zealand industry led us to take action,” the RBNZ said.
On April 30, the RBNZ Governor and the FMA chief executive met with 16 chief executives of New Zealand banks, including the four major Australian-owned banks.
“We sought assurance that the issues identified in Australia were not evident in New Zealand,” the RBNZ said.
Following this meeting the RBNZ and the FMA, with the support of the Commerce Commission, wrote to 10 locally-incorporated NZ banks with major retail operations, initiating a “review of conduct and culture by NZ financial services entities”.
Banks were given a deadline of May 18 to respond. Notwithstanding that insurance has not featured in the RC at this stage, major life insurance companies in NZ were asked to respond by June 22.
“In our monitoring work to date we have not seen evidence of widespread, systemic issues to warrant a commission of inquiry in NZ. However, the work we have initiated may test this view,” the Reserve Bank said.
The RBNZ and FMA jointly said that as they progress with inquiries, they will also identify areas within the framework for regulation of retail financial services where “we consider there are regulatory or supervisory gaps or inefficiencies.
“We expect to report on these findings in October/November. This timing partly reflects the timing of the initial report from the (Australian) RC, by September 30.”