Statement of enforcement approach

In the event of identified non-compliance, the Reserve Bank has the discretion to take enforcement action and to decide what enforcement action to take. This discretion is exercised for the purposes of promoting the maintenance of a sound and efficient financial system.

This means that the Reserve Bank's enforcement approach:

  • aims to reinforce its regulatory and supervisory functions;
  • encourages sound management of institutions by directors and managers;
  • maintains clear minimum prudential standards for financial institutions;
  • in the event of major problems, seeks to minimise the impact of the problems on the wider economy and the financial system.

The Reserve Bank will seek the appropriate sanction to encourage compliance by the individual institution, and by the financial system as a whole. Where relevant, we will collaborate with the New Zealand authorities, and with Australian authorities in respect of entities engaged actively on both sides of the Tasman.

As with the Reserve Bank's supervisory approach, we will always harness and enhance market disciplines where possible. Principal responsibility for compliance remains with the institutions themselves, and their governing bodies.