Jones: Too soon to rule out banking probe
Cabinet Minister Shane Jones says he is surprised that new Reserve Bank governor Adrian Orr so quickly ruled out the need for a New Zealand banking inquiry.
Jones, a New Zealand First MP whose portfolios include regional economic development and infrastructure, is due to report back to caucus on Tuesday about his recent trip to Australia, where he received a private sector briefing about that country’s Royal Commission of Inquiry into misconduct in banking and financial services.
A raft of scandals has emerged from that inquiry, including AMP charging for financial advice that was not provided, and dead clients being charged by Commonwealth Bank of Australia, the parent of ASB Bank.
Yesterday the commission recommended that AMP should face criminal prosecution for misleading Australia’s corporate regulator.
Jones said he didn’t have a position yet on whether a similar inquiry was needed in New Zealand.
“Although I think it’s fair to say that we found it quite curious that Adrian ruled out the need for such an inquiry after only having taken up the role at the Reserve Bank,” he told the Weekend Herald.
“So obviously, he’s made his mind up very quickly there, so that came as a bit of a surprise.”
Orr, who took up the top job at the Reserve Bank a month ago, told TVNZ’s Q+A on Sunday that he did not think such an inquiry was needed here.
“The true problem and challenge that is going on in Australia is cultural. It’s not whether the regulator was awake or asleep. It’s cultural,” Orr said.
The Reserve Bank did not wish to respond to Jones’ comments.
Sam Stubbs, who has worked in insurance and banking, and now heads KiwiSaver provider Simplicity, said yesterday the misconduct in Australia was now too big to ignore here, especially when many of the same companies operate on both sides of the Tasman.
Stubbs said the time had come for a similar examination of New Zealand’s financial industry.
“Politicians, regulators and the industry in New Zealand have been vocal in saying that a similar inquiry is not needed . . . if a commission of inquiry
If there really is nothing to hide, shouldn’t the industry welcome a commission of inquiry? Sam Stubbs
in New Zealand really isn’t necessary, why make such a noise about it?
“If there really is nothing to hide, shouldn’t the industry welcome a commission of inquiry? Surely they’d want to be proved as good as they claim to be?”
Stubbs said one reason given for not needing an NZ inquiry was that there weren’t enough examples of wrongdoing to merit such a probe.
“They all need to look over the ditch, because that was exactly the same reason used in Australia, and it was wrong.
“We all hope it’s different here, but let’s assume nothing and find out the truth.”
Former BNZ chairman Kerry McDonald said yesterday that he believed the Reserve Bank and the Financial Markets Authority had to follow the inquiry very closely and given the links between local and Australian banks, New Zealand could not ignore it.
Massey University banking expert David Tripe said New Zealand had not had any whistleblowers or others reporting problems with banks here.
However, New Zealand’s banks were owned by the Australian banks, so the same behaviour could not be ruled out.
Tripe said if a New Zealand inquiry took the same approach as in Australia, it would depend on finding the dirt to start with. “Having an inquiry on the vague possibility of finding something strikes me as an expensive exercise,” he said.
Prime Minister Jacinda Ardern has left the door open to a banking inquiry in New Zealand.
Even if New Zealand does not pursue its own investigation, Australia’s inquiry would be of interest in this country because of New Zealand’s links with the Australian banks, she told Newstalk ZB this week.
Ardern said she was keeping a “very close eye” on the commission into the banking and financial sector in Australia.
Asked if the Government was considering its own inquiry, she said: “I’m not going to leap in right now and say that that’s necessary. But in a way, by virtue of that work, we will certainly probably have an outcome that will be of use and interest to us.”
The Financial Markets Authority, which regulates financial advice, has said it is closely monitoring developments at the Royal Commission, and is in close contact with the Australian regulator, the ASIC.
“We are engaging with all the businesses involved to discuss the implications for their New Zealand operations.”
A spokesman for the Reserve Bank, which regulates New Zealand’s banks, said it was also closely following the Australian inquiry. “We do not have any concerns about the behaviour in the New Zealand institutions that we supervise.”