Prove we can trust you: FMA

The chief executives of New Zealand’s Australian-owned banks have been told by the Financial Markets Authority (FMA) and the Reserve Bank to prove they are not abusing customers’ trust.

In the wake of shocking revelations from the Australian royal commission of inquiry into banking, FMA chief executive Rob Everett revealed that on Tuesday he called the New Zealand CEOs of the big Australian-owned banks together, alongside Adrian Orr, governor of the Reserve Bank.

Everett wanted more details on how they were different to their Australian parent companies, whose lending and financial advice businesses have been scrutinised and found wanting in Australia.

‘‘It’s not credible to just say that New Zealand is different. You have to demonstrate why either the business structures here, or your business practices here, lead to different outcomes,’’ Everett said, speaking on RNZ’s Morning Report.

Everett said that ‘‘to date we haven’t seen any evidence of systemic abuses along the lines of the Australian industry’’.

In response, the New Zealand Bankers’ Association (NZBA) wrote to the Reserve Bank and FMA saying it would provide any evidence needed to prove Australian-style abuses were not happening in New Zealand.

In a letter to the regulators, the NZBA’s Karen Scott-Howman said: ‘‘We believe we have a strong banking culture in New Zealand. 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.’’

The NZBA also committed to work with government agencies to establish a ‘‘bad conduct’’ register to allow reporting of employee conduct that fell below community expectations.

It would also finalise a new edition of the Code of Banking Practice that better communicated banks’ existing customer commitments.