The Bankers’ Association of New Zealand, in a letter it presented to the FMA and Reserve Bank on Tuesday, says banks have been changing their remuneration policies to ensure retail staff no longer receive incentives based directly on sales performance.
Scott-Howman says that lessons can be taken from what’s happened in Australia, and that New Zealand’s regulators are adept enough at asking the right questions without needing a full-scale enquiry.
The Bankers Association said it has responded to regulators in a letter setting out the regulatory and market difference between Australia and New Zealand and said it has current work underway “to maintain public trust and confidence in the New Zealand banking sector.”
“I think our customers should be confident that there is a strong banking culture here. But I totally respect that people want to have evidence of that,” Ms Scott-Howman said.
“The major banks have already made changes to their remuneration policies to ensure retail staff no longer receive incentives based directly on sales performance, or are in the process of doing so,” she said.
Financial Advice Code Working Group
Ms Scott-Howman says there are ‘ cultural differences’ between the New Zealand Australian regulatory environments.
“We believe we have a strong banking culture in New Zealand. We fully accept we need to back up that position with proof, and we’re happy to work openly and constructively with our regulators to do that,” said association chief executive Karen Scott-Howman.
“In New Zealand we have very effective regulators, and they’ve asked banks to provide them evidence that there’s no problem and we’re very willing to do that,” Mr McLean said.
Last night the Bankers’ Association responded to calls from the Reserve Bank and the Financial Markets Authority (FMA) to provide them with evidence of how New Zealand’s banking culture and conduct is different from what has been revealed by the Australian Royal Commission into financial services industry misconduct.
In a letter to the regulators, the Association set out the regulatory and other market differences between New Zealand and Australia, and the initiatives the industry is currently working on to maintain public trust and confidence in the New Zealand banking sector.
“We believe we have a strong banking culture in New Zealand. We fully accept we need to back up that position with proof, and we’re happy to work openly and constructively with our regulators to do that,” says New Zealand Bankers’ Association chief executive Karen Scott-Howman.
Some banks have already taken steps to address issues raised by the Royal Commission.
In addition to individual banks providing assurances to regulators on their own business practices, the industry is committed to continuous improvement. We have set out the following initiatives in our letter to the regulators:
- Consider adopting an industry-wide whistleblowers’ standard to ensure there are clear processes and safeguards for employees to raise conduct issues
- Work with government agencies to establish a ‘bad conduct’ register to allow effective reporting of employee conduct that falls below community expectations
- Finalise a new edition of the Code of Banking Practice that better communicates banks’ existing customer commitments
- Consider how to further change their remuneration policies to ensure retail staff no longer receive incentives based directly on sales performance
- Consider how to provide further funding to regulators to ensure they can carry out their functions most effectively
- Provide the Banking Ombudsman with further information on banks’ internal dispute resolution schemes, to help ensure they are leading to good customer outcomes.
The letter to the Reserve Bank and the FMA is available here.
ENDS