FMA puts local banks under scrutiny amid Australian banking scandal

by Giles Beckford / 02 May, 2018
RelatedArticlesModule - banking scandal

 Banks have been asked to provide assurances they're not ripping off their customers. Photo / RNZNew Zealand banks will have to prove they're not engaging in the same questionable practices as their Australian owners.

The country's leading banks have been ordered to prove they are not ripping off their customers like their Australians counterparts have been doing.

A royal commission into Australia's financial services sector has found banks have cheated customers and lied to regulators.

The Financial Markets Authority (FMA) and Reserve Bank spoke with the heads of New Zealand banks on Monday seeking concrete evidence the same was not happening here.

"We've asked them to provide reassurances to us that they have scrubbed their business models, and they have a basis for being confident that those issues don't exist here," FMA chief executive Rob Everett said.

Much of New Zealand's financial sector is run by local offshoots of the same organisations now in the gun across the Tasman.

Mr Everett said there was no evidence that what happened in Australia had occurred here.

But he promised that regulators would be asking for more than just the banks' word they had clean hands.

"Our monitoring plan is to check the assertions we've been given and to check that the things we've already seen, and make sure they stack up."

Mr Everett had a warning if the banks did not comply.

"If they do that, they'll see more of us in court."

There is no set timetable for the banks to report back, but Mr Everett expected initial responses in a few weeks.

ANZ Bank was adamant the industry was clean and would stand up to scrutiny.

"They're [regulators] constantly in our business reviewing different areas, and we've said whatever you need to come and have a look at, come and have a look at it," ANZ Bank chief executive David Hisco said.

"We're confident that we don't have the same issues that they have in Australia."

Local banks have been rapped over the knuckles for errant behaviour before.

ANZ, ASB and Westpac paid out more than $25.5 million to avoid legal action from the Commerce Commission over interest rate loans swaps to farmers between 2005 and 2009 that went sour and left thousands out of pocket, with some owing millions.

The FMA had also expressed misgivings about incentives from financial providers that persuaded advisors to offer some products to their clients over others.

There had been few, however, calling for a Royal Commission here.

One of those was Simplicity managing director Sam Stubbs.

"If the industry has nothing to hide they should welcome an inquiry," Mr Stubbs said last week.

"They should all be standing up ... saying let's open the books, let's have the inquiry, so everyone should be able to trust the industry here."

Mr Everett warned it only took one bad apple to irreparably damage the trust needed to manage customers' money, and he urged banks, insurers and their fund managers to get it right.

This article was originally published by RNZ.

Latest

A big science investment - but where’s the transparency?
99199 2018-11-17 00:00:00Z Tech

A big science investment - but where’s the transpa…

by Peter Griffin

An extra $420m is being pumped into the National Science Challenges - but the reasoning behind the increased investment won't be released.

Read more
NZ music legend Gray Bartlett has a new album – and a wild past
99182 2018-11-16 13:32:58Z Music

NZ music legend Gray Bartlett has a new album – an…

by Donna Chisholm

We revisit this profile on award-winning guitarist Gray Bartlett, who's just released a new album, Platinum!

Read more
Vint Cerf: The father of the Internet reflects on what his creation has become
99178 2018-11-16 13:13:08Z Tech

Vint Cerf: The father of the Internet reflects on …

by Peter Griffin

"We were just a bunch of engineers trying to make it work. It didn't even occur to us that anybody would want to wreck it," says Vint Cerf.

Read more
Win a double pass to the NZ premiere screening of Mary Queen of Scots
99165 2018-11-16 10:51:28Z Win

Win a double pass to the NZ premiere screening of …

by The Listener

Starring Academy Award nominees Saoirse Ronan and Margot Robbie, Mary Queen of Scots explores the turbulent life of the charismatic Mary Stuart.

Read more
Goodside: The North Shore’s new food precinct
99155 2018-11-16 09:33:23Z Auckland Eats

Goodside: The North Shore’s new food precinct

by Alex Blackwood

North Shore residents will have plenty to choose from at Goodside.

Read more
The death of Radio Live
99147 2018-11-16 06:54:48Z Radio

The death of Radio Live

by Colin Peacock

14 years after launching “the new voice of talk radio”, MediaWorks will silence Radio Live. Mediawatch looks at what could replace it.

Read more
Should Lime scooters stay or should they go?
99103 2018-11-16 00:00:00Z Social issues

Should Lime scooters stay or should they go?

by The Listener

For every safety warning, there’ll be a righteous uproar about the public good regarding the environment. It's about finding the right balance.

Read more
Kiwi drama Vermilion is hamstrung by a frustrating lack of clarity
98992 2018-11-16 00:00:00Z Movies

Kiwi drama Vermilion is hamstrung by a frustrating…

by James Robins

Academic and film-maker Dorthe Scheffmann has had a hand in some of New Zealand cinema’s most beloved movies. So what went wrong?

Read more