(Bloomberg) -- New Zealand regulators are seeking assurances that local lenders aren’t involved in the same unethical behavior coming to light in Australia’s banking inquiry.
The Financial Markets Authority and Reserve Bank spoke with the heads of New Zealand’s major banks on Monday, telling them to provide evidence that they’re not engaged in practices unearthed by a Royal Commission in Australia, an RBNZ spokesman confirmed. There was no set timetable for responses.
"We’ve asked them to provide reassurances to us that they have scrubbed their business models, and they have a basis for being confident that those issues don’t exist here," FMA Chief Executive Rob Everett told Radio New Zealand, which first reported the news. “We’ll be testing some of what they show us to make sure that we think it really stacks up.”
New Zealand’s four biggest banks are units of Australian banks, which together hold about 90 percent of deposits in the New Zealand financial system. However, RBNZ Governor Adrian Orr, who was involved in the Monday meeting, has said New Zealand doesn’t need to hold a similar inquiry because its banking culture “is infinitely better” than Australia’s.
“Why search for a problem yet to be identified?” Orr told TVNZ in an interview April 22. “I don’t see any lack of confidence in banks in New Zealand.”
Australia’s Royal Commission heard last month that a financial planning unit owned by Commonwealth Bank of Australia collected fees from the accounts of dead people, and that a Westpac Banking Corp. adviser whose misconduct has cost the lender A$2.2 million ($1.7 million) in customer compensation was driven by a desire to increase his bonus.
Everett said there was no need for a public inquiry in New Zealand “at this point.” While there are things that could be improved, “we haven’t seen systemic evidence along the lines of what’s been highlighted in Australia,” he told RNZ.
The New Zealand Bankers’ Association has written to regulators to set out the differences between the two countries and the initiatives currently being worked on to maintain public trust and confidence in New Zealand banks.
Those initiatives include consideration of an industrywide whistle-blowers’ standard, establishing a “bad conduct” register and looking at how to change remuneration policies to ensure retail staff no longer receive incentives based directly on sales performance, the Association said in a statement.
“We believe we have a strong banking culture in New Zealand,” said Association Chief Executive Karen Scott-Howman. “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.”
ANZ Bank New Zealand Chief Executive David Hisco welcomed the scrutiny. "We’re confident that we don’t have the same issues that they have in Australia," he told RNZ.
©2018 Bloomberg L.P.