FMA, Reserve Bank tell local banks to front up

FMA chief Rob Everett urges the banks to back up their claims.

Banking regulators have told local banks to prove their business practices are different from their mainly Australian-owned parents, which are under the spotlight for misconduct in the financial services sector.

The heads of the Financial Markets Authority and the Reserve Bank spoke to bank executives on Monday following serious revelations from Australia’s royal commission of inquiry.

FMA chief executive Rob Everett told RNZ he had asked the banks for evidence that the issues exposed in Australia were not happening here.

“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," he said.

However, he said there was still no need for a banking inquiry in New Zealand. 

The Australian inquiry has revealed a range of problems including that wealth manager AMP had misappropriated funds of thousands of clients by charging them without providing advice and that Commonwealth Bank of Australia had continued to charge some client accounts even after the clients had died.

Although this country’s banks say the industry is different here due to separate governance and regulatory control, some issues are surfacing that appear to be of concern.

NBR’s story yesterday, for example, revealed how ANZ had advised a client to invest all or most of their $540,000 nest egg into ANZ products.

Since that story broke the FMA has said it is working with ANZ to improve its disclosure on investment recommendations.

“We have seen these ANZ disclosure statements and engaged directly with ANZ to ensure it makes improvements to certain areas of its documents,” the FMA said in a statement.

“ANZ has agreed to amend the content covering conflicts of interest and the extent to which they provide advice on products provided by only one organisation or whether they provide advice on competitors’ products.”


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24 Comments & Questions

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1 guess

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Don't need a guess, as i have said here,just look at the board

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Reminds me of Solid Energy controlling the messaging around Pike River, another Kiwi winner!!

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This guy & head of Reserve Bank say no issue in NZ / no Commission - without any investigation!
Looking like Emperors clothes

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It's called regulatory capture.

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The whole banking system is like the Emperor's New Clothes but the bankers are, instead, treated like "sacred cows," who, instead of BEING milked, milk the CUSTOMERS

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Come on folks, we're talking Aussie banks here. It's in their DNA! The FMA should have the balls to act, not merely advise.

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Remember though, the Aussie banks are owned by American and other international banks. Look also at CBL, their shareholders included HSBC Nominees, JP Morgan Nominees, Forsyth Barr Nominees/Kensington Swan, BNP Paribas Nominees, don't know how many more. Then we have, for example, Wetpack. Couldn't quite figure out ultimate owner of Wetpack, but Wetpack Life is owned by Wetpack Banking Coporation in Australia, so there's a clue. This "Who Really Owns the Big Four Banks?" is REALLY worth a look. Here's the link " https://www.creditcardcompare.com.au/blog/big-four-ownership/" Need i say more?

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Fully read the article you linked. You can't say the American and other international banks own CBL or the big four banks.
When its a Nominee Bank, that is the bank holding those shares as a custodial service - the owners would probably be large funds like Kiwisaver funds and Aussie super funds.

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@Outolunches is right, the nominee companies are not owners, they are providing master and sub custody services. They have no decision making power. The issue is, NZ Executives are accountable to Australian Executives, and they are under massive pressure to squeeze every drop out of the NZ operations. The difference in markets makes for a tricky Governance situation, but the NZ Banking Directors appear to accept that they are passive seat warmers. Here is a lead for the NBR... as we know, Anthony Healy CEO of BNZ was suddenly pulled out of BNZ (he said to the media that it wasn’t his call) and Angela Mentis has been put in. Angela is the “go to - fix it Executive” at National Australia Bank, BNZ’s parent. If you look at Angela’s history, and the Divisions she was told to clean up, they have featured at the Australian Royal Commission into Misconduct in Banking. It points to something pretty dodgy happening in BNZ if she was appointed just after the Royal Commission kicked off.

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Just need one large, identifiable story to break and we'll be headed to an full governmental inquiry. Every bank will be scouring its cupboards for skeletons. I bet there are a few, but which aggrieved party will have the guts to take their dispute with a bank public?

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Before you have an inquiry the Labour Govt will require a committee set up to look at if you need an inquiry, then a committee o look at who runs the inquiry. Answers 2025

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I believe that a very simple question would really get the ball rolling. "PPI (Personal Protection Insurance) is, I believe, the Banks' Achilles Heel." Have a look at these, (1) UK "https://www.theguardian.com/money/2016/oct/27/ppi-mis-selling-scandal-bi... (2) Australia http://www.news.com.au/finance/business/banking/banks-may-face-card-insu... (3) India https://economictimes.indiatimes.com/wealth/insure/banks-now-liable-for-.... Not in New Zaland of course! Here's the question, "Are you self employed, unemployed, beneficiary, student, retiree?" If "yes" do you have a loan which has PPI attached? I have said before that during my brief stint as a debt collector, I have seen examples of this so i kow first hand it goes on here

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Surely this is the wrong way round. The banks in NZ should not have to prove they are acting ethically. Shouldn't they have to be accused of something then have to defend themselves?
And what about our NZ owned banks?

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In the court of public opinion you are guilty unless proven innocent.

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The anz private wealth solution had by my figuring total annual fees of 2-3 percent,probably closer to 3.prospective returns are 5-6 given the asset allocation.what would you expect the court of public opinion to think.and this ignore the ridiculous we pick anz products cause they are the best nonsense disclosure.

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I doubt any of the NZ fund managers offering ‘wealth’ solutions would be far off 3% annual, and some will be considerably higher given annual total fund fees in the 3-4% range before the advice and platform/admin fees are added.

Ditto for the sharebrokers, who charge commission on all trades plus the advice/management fee plus the underlying fund fees plus the platform fee.

Obviously in the high return environment since 2009 these fees have been easy to sweep under the carpet, but in a future 6%-7% return world, there’s no way anyone should be able to get away with 3%-5% total fees.

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Have you not read the ANZ financial advice fiasco? The banks own position is that recommending their own products is not a conflict of interest.

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Hmmm!!
Is it "unethical" for a supermarket, a shoe shop, a take-away, a butcher, baker, candle-stick maker to "recommend their own products?

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Yeah............nah

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Seems a bit like leaky buildings self certification

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Not too likely based on my personal dealings with them.

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This is a pack of cards waiting for someone to pull the correct cord.
It will collapse with many many surprises including which banks are owned by who.
Some are owned by the same parties and are protecting each other.
That includes the USA owning the AU banks and the AU banks claiming ownership of the resident NZ banks.
But what goes round comes round and this wheel is clearly in trouble.

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This sycophantic agreement, by posters here and elsewhere, with the Gov. lambasting of the banks is concerning. Are we slowing going back to "Muldoonism"?
The warehouse getting smacked for closing one of its own stores!! Telcos getting re-regulated, private farmers being "prepped" for a massive regulatory/tax attack, privately owned banks getting smacked around for "pushing" their own product, successful charter schools being shut down, privately owned petrol suppliers being attacked for their pricing at the same time as the Gov. increases the tax on petrol, on and on it goes, with winter coming up just watch the Gov. get stuck into electricity suppliers.
Be very very careful folks you may well end up being next.

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