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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