In 2018, we completed a joint review with the Financial Markets Authority into the conduct and culture of New Zealand's 11 largest retail banks. The review was the first of its kind in New Zealand. This page discusses the findings of the review and next steps.
The regulators (the Reserve Bank of New Zealand and the Financial Market Authority) found significant weaknesses in the governance and management of conduct risks. These weaknesses have resulted in a number of issues needing remediation. Banks’ lack of proactivity in identifying and remediating conduct issues and risks means vulnerabilities remain.
The regulators concluded banks need to significantly improve their approaches to identifying, managing and dealing with conduct risk.
The regulators also found a small number of issues related to poor conduct by bank staff, which the banks are following up. However, based on their findings, the regulators do not consider that widespread misconduct or poor culture issues currently exist across banks in New Zealand.
This report outlines the findings from the review:
All 11 banks reviewed received individual feedback and had to report back and provide plans to address regulators’ feedback by the end of March 2019.
The main areas identified for improvement included:
While banks have the main responsibility for developing strong governance and management frameworks for conduct risk, the current regulatory settings do not provide enough scope for regulators to hold banks to account for their conduct.
The report sets out a number of options the government could consider to address these issues.