Rob Everett told RNZ the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia had produced “ugly” revelations about behaviour in the financial services sector.
“I think it’s devastating for the industry, the stories that are being told. Most of the issues that we’ve heard are issues that were well known to the regulators, they are issues that have surfaced before. So we have been spending time here in New Zealand making sure that our work plans react to that and where we’re looking is somewhat driven by the experience in Australia,” he said.
New Zealand had not seen any evidence of systemic abuses along the lines of the Australian industry, he said.
“But as we’ve said to the New Zealand banks, we can’t afford to be complacent, we really have to up our game to make sure that those same issues aren’t being replicated here.”
Everett said he and Reserve Bank Governor Adrian Orr had called the bank chief executives to make it clear that they needed to demonstrate why either the business structures here, or your business practices here, lead to different outcomes.
“Now we at the FMA, we see some of that. But actually we think the banks need to front up and really explain why it should be different. And that’s the process that we’re going through with them now.
“We’re asking them to give us assurances, including in writing, as to the processes they’ve followed to check themselves against what’s coming out of the Royal Commission. And as I say, a lot of those issues were well known so they’re not new issues, they should have been checking against them already, we’ve asked them to provide assurances to us, the RB and the FMA, that they have scrubbed their business models and that they have a basis for being confident that these issues don’t exist here.”
Everett said Australia’s Royal Commission “ups the temperature for New Zealand” and put people on notice that the industry needed to get it right.
“If we see areas where we think the law has been breached or the conduct is really poor, we will go after it. We are also spending a lot of time pushing and influencing and urging the providers just as a matter of best practice to think harder about what the customers need and less about their bottom line.”
He said he did not think there should be a public inquiry in New Zealand at this point.
“I don’t think so at this point. The government is looking at insurance law, the government’s looking at consumer credit, there’s a financial advice bill going through select committee right now, we’ve got a very transparent work programme as to where in the industry we’re looking for issues. I would rather let that work progress before anyone leaps to any conclusions about whether or not to have an inquiry. I’d also add the Australian inquiry has only been going a few weeks. The initial report isn’t out until September the final report isn’t out until February. I think rather than rushing to conclusions I’d like to let the work that’s currently under way make more progress before conclusions are reached.”
