No hard conclusions should be drawn from RBNZ and the FMA’s briefing to the Finance and Expenditure Committee regarding the Australian Royal Commission, says Simplicity.
In their briefing to the Finance and Expenditure Committee, regulators stated that there is no evidence of widespread, systemic issues to warrant a commission of inquiry in New Zealand.
11 banks have so far provided responses to the FMA and RBNZ’s request for information, and the regulators have stated that the submissions are ‘generally extensive and for the most part appear relevant.’ They also say that whilst some responses ‘indicate a proactive approach,’ other banks have not yet begun to embed conduct risk or oversight into their operations.
According to Simplicity chief executive Sam Stubbs, this development is not an indicator that a Royal Commission is not necessary in New Zealand.
“It is far too early to be passing judgement at this stage,” Stubbs tells NZ Adviser. “You would hardly expect the banks to lay out their misconduct issues in response to an FMA and RBNZ information request, and the FMA has only just started looking at responses. At this stage, this is a regular report to the Committee to provide an update on where they are in the process.”
According to Stubbs, there are strong parallels between New Zealand and Australia when it comes to the various stages of the process. No evidence of misconduct was found at this particular stage in the Australian procedure, and feedback from politicians and industry participants was stacked against a full-scale inquiry.
“None of the banks revealed the full scale of their operations up until the point of the senate enquiry,” he explains. “There are certainly whistleblowers in New Zealand who would be willing to talk, but they’re not going to do that under the current whistleblower legislation. They only uncovered the vital information in Australia when third-party persons were speaking under the full protection of the law, and it is highly unlikely that the regulators would uncover evidence of systemic misconduct based on banks offering answers to a list of questions.”
The regulators will be requesting further information from banks where necessary, and say that ‘a high bar will be set’ in meeting their expectations. They also say they may uncover evidence to challenge their current view.
“They have very much left that door open,” says Stubbs. “This is the first piece of news that has emerged since the submissions came in, and there isn’t a need for an inquiry based only on what they see at the moment.”
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New Zealand similar enough to Australia to warrant a Royal Commission- Simplicity