The FMA has called on banks to provide solid proof of good business practices, and the Bankers' Association says it's willing to comply
The New Zealand Bankers’ Association has responded to calls from the FMA to offer up proof that its banks’ business practices are different to those of Australian counterparts. This follows a number of misconduct issues brought to light by the Australian Royal Commission into the financial services sector, which has brought to light a series of revelations and sent shock waves across the industry.
FMA chief executive Rob Everett says New Zealand’s banks must solidly demonstrate that their business practices are different, and that merely stating it as fact will not be enough.
The Bankers’ Association has since responded in a letter to the regulators, which outlined the key differences between New Zealand and Australia’s markets and suggested a number of initiatives to maintain public confidence in New Zealand’s banking sector.
“We have a very strong conduct culture here in New Zealand,” Bankers’ Association chief executive Karen Scott-Howman told NZ Adviser.
“There are many differences between the New Zealand and the Australian market, not least of which is the regulatory approach. But if we’re being asked questions by the public, then we must come back with assurances and proof points. It’s what our customers and regulators expect and deserve, and if they’re asking for it, then we’re very happy to cooperate.”
Scott-Howman says that lessons can be taken from what’s happened in Australia, and that New Zealand’s regulators are adept enough at asking the right questions without needing a full-scale enquiry.
“What people want is for us to be able to get back to business and maintain high levels of trust,” she continues. “It’s a continuous improvement story here in New Zealand, and we’re not afraid of the regulators asking us to proactively provide them with information.”
In its letter to the regulators, the Bankers’ Association outlined the following initiatives:
- An industry-wide whistleblowers’ standard to ensure clear processes and safeguards for people reporting sub-par behaviour.
- A ‘bad conduct’ register to allow effective reporting of employee misconduct.
- A new edition of the Code of Banking Practice that clearly communicates banks’ customer commitments.
- Further funding to regulators.
- Providing the Banking Ombudsman with further information on banks’ internal dispute resolution schemes.
