Finance Minister Grant Robertson says New Zealand banks need to be able to prove to customers they don’t operate the same way as their Australian parents.
A Royal Commission in Australia revealed a culture of rule-breaking within the financial services sector, including the rigging of interest rates and allegations of money laundering.
The revelations led to the resignation of AMP’s chief executive and chairman and put a dark cloud over the banking system as a whole.
Because of the revelations, the New Zealand Bankers’ Association (NZBA) has recommended an industry-wide whistle-blowers’ standard, as well as other changes to “maintain public trust.”
Robertson says although there is no suggestion New Zealand banks are operating in the same way as those in Australia – “it is important that we have the evidence of that.”
“I expect, on behalf of the consumers, for the banks to be able to show us that’s true.”
On Monday night, the Financial Markets Authority (FMA) and the Reserve Bank told the big four banks to prove they’re different to their Aussie parents in light of the Royal Commission revelations.
“It’s not credible to just say that New Zealand is different,” FMA CEO Rob Everett told RNZ.
“You have to demonstrate why either the business structures here or your business practices here, lead to different outcomes.”
Robertson says the approach taken by the FMA and Reserve Bank was the right one.
“I endorse the approach that says banks need to be able to make sure that they can prove to New Zealanders the way they operate is not the way that we have seen in Australia.”
He says the scale of the issue in Australia is “so significant, there is an obligation on New Zealand banks to show that evidence,” given the stake of Australian banks in New Zealand.
Reserve Bank Governor Adrian Orr says there is no need for a similar Royal Commission in New Zealand. Orr said the culture of the New Zealand banks is “infinitely better than some of the activity in Australia.”
Asked if he agrees, Robertson says, “that’s certainly what we have been told.”
Minister of Commerce Kris Faafoi agrees with Robertson that there is no evidence to suggest Kiwi banks are operating in the same way as their parents.
But he says there are some questions the banks are going to have to start answering “if they want to prove the point that they’re different from their parent companies.”
A ‘strong’ banking culture in New Zealand
New Zealand Bankers’ Association CEO Karen Scott-Howman says she believes there is a strong banking culture in New Zealand.
“We fully accept we need to back up that position with proof, and we’re happy to work openly and constructively with our regulators to do that.”
In a letter to Everett and Orr, Scott-Howman says the public has a “right to expect assurances” in light of the issues in Australia.
She says in order to maintain public trust and support in the industry, the NZBA will consider adopting an industry-wide whistle-blowers’ standard, to ensure there are clear processes and safeguards for employees to raise conduct issues.
Further changes to remuneration policies, to ensure retail staff no longer receive incentives based directly on sales performance, has also been mooted, Scott-Howman says.