Bank misconduct: Is NZ at risk, too?
An insurance market expert who has led big-name financial services providers on both sides of the Tasman says an inquiry is needed into the behaviour of New Zealand’s banking and financial sector.
Australia has been rocked by a series of financial sector scandals in recent years.
Last week, a royal commission into misconduct in Australia’s banking, superannuation and financial services industry heard that Commonwealth Bank of Australia (CBA), which is ASB’s parent company, had charged dead clients for advice.
Then, in the same week, it was revealed that AMP had misled Australia’s banking regulator as many as 20 times over its practice of charging for advice that clients never received.
With our four big banks owned by Australian parents, and AMP a key name in our KiwiSaver industry, could it happen here?
David Whyte, former managing director of AIG Life in Australia and former general manager of AIA in New Zealand, said the culture in multinational organisations tended to be driven by the same performance measures and same expectations of shareholder value in all the countries they operated in.
He suspected New Zealand personnel showed more integrity than their Australian counterparts had.
But he said only an inquiry would prove that beyond doubt and avoid a smear on the industry. ‘‘For the benefit of the [organisations] themselves there should be a sort of health check carried out.’’
That would clear them of any lingering suspicion, he said.
There is also staff movement between the New Zealand and Australian operations. Vittoria Shortt, the new chief executive of ASB, came to New Zealand from CBA. Jack Regan, who appeared before the commission representing AMP’s advice arm, was at the helm of its New Zealand business for 10 years.
But banking expert Claire Matthews, of Massey University, said it should not be assumed that the same things were happening in New Zealand simply because the parent companies were the same.
‘‘They are subsidiaries; they do things differently.’’
Reserve Bank governor Adrian Orr and Commerce Minister Kris Faafoi have agreed with her.
Karen Scott-Howman, chief executive of the New Zealand Bankers’ Association, said New Zealand had a different regulatory environment.
‘‘One of the things that sets us apart here is our open and transparent relationships with our regulators. That tends to help us proactively address issues before they become serious,’’ she said.
‘‘The attitude of our regulators is supported by strong legislation, which includes powers for regulators to demand information from banks about their practices.
‘‘Our customers can be assured no systemic issues have been identified to date and can have confidence in the New Zealand banking system overall.’’
Whyte said a key problem for the industry in New Zealand was the separation of product sales from true financial advice.
Both had a place in the market, but the consumer needed to have a clear idea of what was being offered to them. Big providers needed to ‘‘come clean’’ about which they were doing, he said.
The Financial Markets Authority said it had been watching Australia’s royal commission closely and talking with New Zealand-based firms. ‘‘We are considering whether to accelerate or adapt any of the planned work to reflect issues being raised in the royal commission.’’