The review of New Zealand banks culture and conduct by the Financial Markets Authority (FMA) and Reserve Bank of New Zealand (RBNZ) has been released, and has again highlighted governance of conduct risks, according to one expert.
The Institute of Directors (IoD) said it is pleased the report found no widespread misconduct or poor culture issues. However, IoD chief executive Kirsten Patterson noted the weaknesses identified need to be addressed immediately as the reports’ authors had stressed.
“All boards have a core role in overseeing corporate culture, conduct risk and setting high standards of ethical behaviour,” Patterson said. “They need to think beyond compliance, take the lead and set the tone.
“Boards should ensure there is an effective culture of whistleblowing, and comprehensive and timely reporting from management. Boards should ask themselves what information and reporting tools they need from senior managers to ensure conduct risk is managed. This will include measuring customer complaints.”
Patterson explained conduct risk such as fraud, corruption, bribery and unethical behaviour can cause significant financial and reputational damage. She also mentioned IoD’s 2017 Director Sentiment Survey, which found that just 44% of New Zealand company boards had assessed organisational ethics risks, and 32% had discussed how they could make whistleblowing and speak-up provisions more effective in their organisations.
“By building good conduct into their business models, boards will focus on long-term sustainability, good customer and shareholder outcomes, and a healthy culture for staff,” she added.