Reserve Bank Financial Policy Committee to make financial stability decisions by consensus 'wherever possible'

The Reserve Bank has named Heidi Richards, a consultant who formerly worked for the Australian Prudential Regulation Authority (APRA), and Auckland University professor Prasanna Gai, as the external members of its new Financial Policy Committee (FPC).

Gai is also a member of the Reserve Bank's Monetary Policy Committee.

A new committee of the Reserve Bank's board, the FPC will make key financial stability policy decisions, including setting prudential requirements for financial institutions regulated by the Reserve Bank, and making macro-prudential policy decisions such as debt-to-income ratio and loan-to-value ratio settings for bank lending. On a bi-annual basis the FPC will also approve the Reserve Bank's Financial Stability Report.

The FPC's establishment was a recommendation from the banking inquiry undertaken by Parliament’s Finance and Expenditure Committee last year.

The other FPC members include Reserve Bank governor Anna Breman and the central bank's non-executive board members Byron Pepper, who will chair the FPC, Grant Spencer, and Philip Vermeulen. Reserve Bank chairman Rodger Finlay will also be on the FPC.  

Gai is Professor of Macroeconomics and Head of the Departments of Economics, Accounting & Finance, and Property at the University of Auckland. Richards' career at APRA culminated as acting executive general manager in 2019-2020. The Reserve Bank says she led the policy function at APRA, overseeing implementation of major pillars of international banking policy and financial sector regulatory reforms following the Global Financial Crisis.

Between 2020 and 2022 Richards was head of risk and regulatory compliance at buy now, pay later firm Afterpay. As a consultant she advises financial institutions, fintechs and others on regulatory strategy. 

Decisions by consensus wherever possible, minutes can record minority views

The FPC has a charter, including terms of reference. The charter sets out that decisions will be made by consensus wherever possible. If the FPC chairman, Pepper, believes consensus can't be reached, the decision will be by majority vote of the FPC members present and voting. If the vote is split, the Governor, Breman, has a second casting vote.

"The FPC members will accept the decision as binding, whether it is made by consensus or voting. However, the minutes may record the views of an FPC member in the minority at the member’s request. The external FPC members provide independent perspectives to the FPC’s decision-making."

Pepper, a former investment banker at Goldman Sachs, has been a Reserve Bank director since 2022. Spencer is a former Reserve Bank deputy governor and acting governor. Vermeulen, Professor of Economics at University of Canterbury, was appointed to the Reserve Bank board last February.

"The FPC’s work will be crucial to promoting New Zealand’s financial stability and the wealth of experience of all the FPC members will enhance and bring focus to the Reserve Bank’s financial policymaking," Finlay says.

"I would also like to express my gratitude to all those who expressed their interest in serving as external members of the FPC. Ms Richards and Professor Gai were selected from a strong field of candidates."

Gai was also a member of the Financial Markets Authority board from 2018 until December 31, 2025.

The Reserve Bank's board remains ultimately accountable for the exercise of functions and powers it delegates to the FPC and will review the FPC’s statutory delegations annually. The board will review the FPC's charter at least every two years.

Richards has been appointed for a four-year term from 1 January 2026 to 31 December 2029. Gai's is a three-year term from 1 January 2026 to 31 December 2028. In addition to serving on the FPC, Gai will continue serving on the Monetary Policy Committee.

The FPC will hold its first meeting in late February and will meet at least five times a year.