However, some banks have not yet begun to fully embed conduct risk, governance or oversight into their operations, the two bodies say.
The regulators have briefed the Finance and Expenditure Select Committee on the Australian Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry, and the response by regulators in New Zealand.
They said they had been monitoring the Royal Commission since it was initiated, and discussed matters with Australian regulators on a number of occasions.Their concern was the impact on confidence in New Zealand institutions and the potential for complacency. The Reserve Bank Governor and FMA chief executive met 16 chief executives of New Zealand banks on April 30.
They then wrote to 10 locally-incorporated New Zealand banks with major retail initiating a “review of conduct and culture by New Zealand financial services entities”.
Banks were given a deadline of May 18 to respond. Insurers received a similar request on May 23.
“In our monitoring work to date we have not seen evidence of widespread, systemic issues to warrant a commission of inquiry in New Zealand. However, the work we have initiated may test this view,” the regulators said.
Eleven banks provided their responses by the deadline. A joint working group of FMA and RBNZ staff is reviewing the responses. The Commerce Commission is also reviewing matters relevant to its remit.
The FMA and RBNZ said the submissions were generally extensive and for the most part appeared relevant to the 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, the regulators will request further information and verification where necessary.
