Regulator seeks views of staff

Frontline bank staff are being interviewed by regulators in a bid to check banks are treating customers as well as they claim.

The Financial Markets Authority (FMA) is reviewing banks’ treatment of customers in New Zealand, after Australia’s royal commission of inquiry into banking revealed how poorly Westpac, ANZ, Commonwealth Bank of Australia (owner of ASB) and National Australia Bank (owner of Bank of New Zealand) have treated some of their customers on the other side of the Tasman.

As part of the New Zealand review, the FMA has been interviewing frontline bank staff, its chief executive, Rob Everett, said. Rob Everett, FMA

It had also been talking with bank unions to harvest the opinions of bank workers away from the watchful eyes of their managers.

The FMA’s review of banks, which it is conducting with the Reserve Bank, aims to uncover whether any aspects of the toxic Australian banking culture have crossed the Tasman.

Banks have been asked to provide detailed information on the way they treat customers, but the FMA wasn’t taking banks at their word.

‘‘A lot of what we are trying to do is get behind that, and see if it is real, and work out why, even for those firms who might have on paper the best governance, the best structures, things still seem to happen that don’t match with that,’’ Everett said.

‘‘One of the challenges here is to have dialogue with people who aren’t being put in front of us by management, who aren’t reading from a policy. Because, frankly, they all start looking the same, they are using the same consultants, and using the same law firms,’’ he said.

The FMA’s director of regulation, Liam Mason, said: ‘‘We we know that subcultures can develop in different parts of banks.

‘‘We’ve asked the banks to give us their staff, and are sitting down and talking with them.’’

There were fears that banks were watching closely who was speaking to the regulators, and even debriefing them afterwards.

But Mason said the FMA had also asked the unions to provide bank workers for its regulators to talk to.

First Union was battling to have the banks scrap sales targets, which it said put staff under pressure and turned banking from a service industry to a sales industry.

It’s a campaign that seemed to be winning ground, with ANZ on Wednesday pledging to end sales incentives.

The FMA had seen very little whistleblowing in New Zealand from bank staff, and very few complaints from customers, but Everett was sceptical about whether that reflected the reality of bank conduct.

Everett said New Zealand wasn’t keen on following Australian and US regulators in embedding regulators within the banks and large insurers.

Everett said he would worry that they would ‘‘go native’’, a phrase sometimes used to describe a diplomat being posted so long in another country that they start seeing things from that country’s perspective.

‘‘If you put people into a large organisation full of well-meaning, nice people, I think you are really at risk of them drinking the Kool-Aid.’’