Reforms on the Financial Adviser Act are stated to be a priority
The Financial Markets Authority (FMA) and Reserve Bank of New Zealand (RBNZ) have sent a letter to licensed New Zealand banks demanding they prove that misconduct of the type recently highlighted in Australia is not taking place in New Zealand.
“We expect you to show us what you have done in order to be comfortable that there are no material conduct issues within your business,” the letter states. “We anticipate that you will have undertaken an exercise of that nature after our Conduct Guide (published in February 2017) and may be extending or enhancing that work in response to issues raised at the Royal Commission or more broadly as a result of that inquiry.”
In the letter, the regulators said the Financial Adviser Act reforms will remain among its key priorities. It also states that the regulator will reserve the right to conduct on-site monitoring as necessary, and has requested a written response from banks addressing the following topics:
- Any actions the banks have taken to identify and address conduct risk – including any “gap analysis” work against the expectations set out in the FMA’s Conduct Guide
- Any specific plans and actions banks have taken to respond to the issues and themes arising from the Royal Commission
- Any other work that is underway to proactively identify and address potential conduct and culture risk
- Any work underway to remediate any identified issues where bank conduct has resulted in detrimental outcomes for customers.
RBNZ and the FMA have also requested a document outlining details on banks’ progress including their key objectives, level of management oversight, details of any remediation programmes and a summary of early findings. The FMA is set to assess the banks’ responses and agree on next steps and further information requests at a later date.
Banks currently have until May 18 to submit and prove that consumers, regulators and other stakeholders can have full confidence in the financial services industry in New Zealand.
