The RBNZ and the FMA have briefed the Finance and Expenditure Select committee on the Australian Royal Commission (RC) fall-out and the regulators’ response to it in New Zealand.
The two regulators confirmed they have been monitoring the RC since it began and have discussed matters with Australian regulators on several occasions.
The findings from the RC raised the regulators’ concern about the impact on confidence in New Zealand’s financial institutions and the potential for complacency in the New Zealand industry.
They have since sought assurance that the issues identified in Australia were not evident in New Zealand from both the banking and insurance sectors.
“In our monitoring work to date we have not seen evidence of widespread, systemic issues to warrant a commission of inquiry in New Zealand,” the regulators said in a joint statement.
“…the work we have initiated may test this view.”
“However, the work we have initiated may test this view.”
They confirmed the eleven banks provided their responses by the 18 May deadline and a joint working group of FMA and RBNZ staff is currently reviewing the responses.
The following initial observations have been made:
- The submissions are generally extensive and for the most part appear relevant to our request.
- Preliminary assessment has identified some variance in detail and the extent of work already completed and expected to be conducted in the future.
- Some responses indicate a proactive approach to conduct risk, while other banks have not yet begun to fully embed conduct risk, governance or oversight into their operations. We will be following up with all the banks on these aspects.
“Following the initial assessment, we will be requesting further information and verification where necessary,” they stated, adding:
“A high bar will be set in meeting our expectations and demonstrating a sufficient level of assurance in regard to good conduct and culture.”
The regulators said they have not yet decided whether they will expand their focus beyond banks and insurers.
They expect to report on their findings in October/November, following the release of an initial report from the Australian RC in September.