Only transparency can avert an inquiry
As a small-business owner, one of your many tasks is to maintain a relationship with your bank. Meeting your account manager in person and establishing a rapport before you need anything from them is just common sense.
So, it was both surprising and irritating, at such a getting-to-know-you meeting with our personal banker, to have a bunch of KiwiSaver forms plonked down in front of us for signature.
The presumption seemed to be that if they produced some forms, we would compliantly sign up to their product. The arrogance of that manoeuvre wasn’t enough to make us change banks, but it was a warning signal the bank surely didn’t intend to send.
That was maybe three years ago now. Perhaps our bank wouldn’t do that today.
However, the National Business Review’s report this week that ANZ’s New Zealand operation had ‘‘advised’’ a customer to put their total $450,000 savings solely into ANZ products hardly inspires confidence. The bank is now working with the Financial Markets Authority (FMA) to improve its conflict of interest disclosure and, hopefully, making sure its staff never do that again.
Coming the week after an Australian banking royal commission of inquiry found evidence of ‘‘fees for no service’’, fees paid by the deceased, and mis-sold products by conflicted salespeople, the timing of the ANZ story could not have been worse.
Or perhaps it could. On the same day as that story broke, ANZ’s New Zealand boss, David Hisco, was attending an urgently called meeting with the governor of the Reserve Bank, Adrian Orr, and his counterpart at the FMA, Rob Everett.
Also at the meeting were the chief executives of most of New Zealand’s banks, including the four Australian-owned institutions that dominate banking in this country, and AMP – whose Australian chairwoman and CEO have both fallen on their swords in the past few days, following the Australian royal commission’s findings.
A complacent ‘‘nothing to see here’’ response from banks here to the Australian revelations would not do, the bank bosses were told.
The regulators have given them two weeks to come up, not only with evidence to back their claim that Aussie-owned New Zealand banks do things differently and better, but evidence of efforts both already under way and planned for the future.
Failure to do so adequately is likely to lead to intense political and customer pressure for a replication of the Australian banking inquiry here.
This may all come as a surprise to casual observers of the financial services industry. But they are no surprise in the banking sector, which has been bracing for months for just such an outcome. Why else would applicants for a government relations manager’s role with one of the big four banks have been told their primary task would be preparing for a banking inquiry?
Nor are the behaviours in question a surprise to senior New Zealand bankers. In private, they are happy to complain about the pressure they say they regularly fend off from Sydney or Melbourne to pursue new business in ways that are too aggressive for the New Zealand market.
The reality for banks operating in New Zealand has long been that while they may not be loved, they have never been held in the sort of entrenched low esteem that prevails in Australia.
However, unless New Zealand banking leaders are brave enough to transparently differentiate and prove that they are resisting the habits of their Australian owners, they risk the same dog-box status on this side of the Tasman too.