By Jason Walls
The country’s top banking executives could be summoned to Wellington to convince MPs that New Zealand’s banking practices are different from those of their Australian counterparts.
This follows a damning Royal Commission across the Tasman that uncovered a culture of widespread poor conduct within the banking sector.
Finance and Expenditure Select Committee Chairman Michael Wood told interest.co.nz that getting banking and financial sector bosses to front up to MPs is an “open and live option.”
“There is clearly a great deal of public interest in this issue and it’s really important to people for confidence that our financial institutions are engaging in ethical behaviours,” Wood said.
Earlier this month the Financial Markets Authority (FMA) and the Reserve Bank ordered bank bosses to prove their banks are better behaved than those in Australia, which include the parents of ANZ NZ, ASB, BNZ and Westpac NZ.
Wood, the Labour Party MP for Mt Roskill, says his select committee is seeking a briefing from the regulators to get an update on this process.
“What I have indicated is beyond that, we leave open the option of requesting the financial institutions, and other people with interest in the issue, might appear before the committee.”
Wood says the committee will decide after it has heard from the FMA and the Reserve Bank if it needs to hear from banking bosses as well.
But he says he will summon industry chief executives if he feels it’s necessary.
“We haven’t determined that as a committee, but I am very much leaving that open.”
New Zealand Bankers' Association Deputy Chief Executive Antony Buick-Constable says at the moment, the banks are focusing their attention on providing information to the regulators as part of their current review.
“That’s about providing evidence that we don’t have the kinds of systemic issues identified in Australia.”
Onus on the banks
FMA Chief Executive Rob Everett told RNZ earlier this month that the onus was on New Zealand banks to demonstrate why and how practices were different in New Zealand. The FMA has asked bank bosses to detail what they're doing to prove consumers, regulators and other stakeholders can have full confidence in the financial services sector. The banks have until this Friday, May 18, to respond.
Finance Minister Grant Robertson has echoed Everett’s comments.
He has previously said the scale of the issue in Australia is “so significant, there is an obligation on New Zealand banks to show that evidence,” given the dominance of Australian owned banks in New Zealand.
Wood says this is the rationale behind potentially bringing in the bank bosses.
“If we go down that track, it gives us the opportunity to inform Parliamentarians, but also the public, about what’s going on and hopefully give some assurance.”
Finance and Expenditure Select Committee staff are in the process of arranging a time for the FMA and the Reserve Bank to be questioned by MPs.
After that, Wood will assess whether or not it’s appropriate for banking and financial institution CEOs to appear in front of the committee.
Buick-Constable says it’s important the regulators have a chance to assess the information from banks. “They can then set out the next steps.”
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