The financial sector watchdog says it is in talks with Australia’s major banks and financial services firms about the implications for their New Zealand arms in the wake of Australia’s banking inquiry which has exposed a series of scandals.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will head into its second week of hearings in Australia this week, probing issues around financial advice.
Last week’s hearings saw the inquiry claim its first scalp after AMP chief executive Craig Meller resigned on Friday and the company issued an apology after revelations that it had charged people for advice they never received.
Earlier in the week the inquiry heard that advisers from Commonwealth Bank of Australia, the parent of ASB bank, charged dead clients for financial advice — in one case for a decade.
ANZ, Westpac and National Australia Bank, which owns BNZ, are due to appear this week to face allegations about inappropriate financial advice and improper conduct.
The advice hearing is the second in a series of three public hearings for the Royal Commission, which is being headed up by Judge Kenneth Hayne.
Last month the major banks were also raked over the coals for controversial consumer lending practices which spanned mortgages, car finance, credit cards and insurance add-on products.
A third hearing on lending to small business and the agricultural sector will be heard next month.
Hayne is due to produce an interim report on the inquiry by September which could have major implications for New Zealand, where the major banks are all Australian-owned, and financial services company AMP also has a strong presence.
A spokesman for the Financial Markets Authority said it was monitoring the developments at the Royal Commission closely and was in close contact with the Australian regulator ASIC.
“We are engaging with all the businesses involved to discuss the implications for their New Zealand operations.”
Commerce and Consumer Affairs Minister Kris Faafoi said he did not think that New Zealand had such extremes of behaviour.
”I have not had any advice to suggest that we need a financial services inquiry,” he said.
”There’s always room for improvement however, so we have work underway including the Financial Services Legislation Amendment Bill and development of a Code of Conduct.”
Faafoi’s aim was for consumers to be able to access good-quality advice.
”If we need to do more in the interests of the consumer then we will do so — but at this stage I don’t think there is that requirement,” he said.
A spokesman for the Reserve Bank, which regulates New Zealand’s banking sector, said it was also closely following the Australian Royal Commission.
“We are aware of media reports of misconduct in banking and other financial institutions.
“We do not have any concerns about the behaviour in the New Zealand institutions that we supervise.”
New Zealand Bankers’ Association chief executive Karen Scott-Howman said New Zealand’s regulatory environment was very different from that in Australia.
“The Australian-owned banks operating in New Zealand are separately governed and regulated under New Zealand law,” Scott-Howman said.
“The New Zealand financial services sector — banking, wealth management, superannuation, KiwiSaver and insurance — is well managed, well regulated and has high levels of customer trust and confidence.”
AMP’s New Zealand arm has been quick to say that there is nothing to worry about here.
Blair Vernon, managing director of AMP Financial Services in New Zealand, said the New Zealand arm operated with a different regulatory and governance framework to its Australian parent.
“We don’t operate the same distribution model.”
Blair said it maintained an open and transparent relationship with New Zealand regulators and had been in touch with the Financial Markets Authority and the Reserve Bank in the last week.
“In New Zealand it really is business as usual,” he said.