New financial stability chief flags "trust and verify" era for regulated firms
The Reserve Bank has laid out its regulatory priorities for the period ahead, with newly appointed assistant governor financial stability Angus McGregor (pictured) signalling a shift toward firms being expected to demonstrate compliance rather than simply assert it.
A new voice, a familiar mandate
Delivering his first address to industry since his appointment last month, McGregor told the Financial Services Council Conference in Auckland that financial stability underpins New Zealand's broader economic wellbeing.
"Financial stability is about ensuring financial institutions can keep supporting households, businesses and the wider economy through both normal times and periods of stress," he said, adding that a stable system lets New Zealanders "save, borrow, invest, insure against risk, and make long-term decisions with confidence."
McGregor outlined three priorities guiding the Reserve Bank's approach: maintaining a fit-for-purpose regulatory regime, taking a forward-looking and system-wide view of emerging risks, and sustaining constructive relationships with industry. On the first, he said a workable regime "means regulation and supervision that are proportionate, risk-based, evidence-informed and future-proofed," while remaining disciplined about minimising unnecessary burden on firms.
Deposit Takers Act and insurance reform move into implementation
Two major reforms sit at the centre of that work. The Deposit Takers Act, described as the most significant overhaul of prudential regulation for banks and non-bank deposit takers in decades, is moving from policy design into implementation, bringing deposit takers under a more consistent framework and introducing the Depositor Compensation Scheme.
RBNZ has already eased capital requirements under the new settings, a move governor Anna Breman said would reduce deposit takers' funding costs and could flow through to New Zealanders "through increased lending and reduced rates."
In parallel, the Reserve Bank's review of the Insurance (Prudential Supervision) Act has produced an exposure draft now out for consultation, aimed at modernising the framework and aligning it more closely with international practice.
Beyond these immediate reforms, the Reserve Bank is also looking further ahead. It's preparing to publish an issues paper on payments modernisation this month, followed by a broader piece on "the future of banking" next month examining global forces reshaping the sector and their implications for New Zealand.
Firms rate relationships highly, but want clearer communication
On supervisory relationships, McGregor pointed to this year's Relationship Charter survey results, with 89% of regulated firms rating their supervisory relationship as good or very good, and 80% rating the Reserve Bank's prudential policy consultation process similarly. Even so, firms told the Reserve Bank they want clearer communication, better coordination, and more visibility of upcoming changes.
McGregor was careful to frame that goodwill as compatible with firmer oversight rather than a substitute for it.
"Strong relationships help us do that job better," he said. "They allow issues to be raised earlier, risks to be better understood and openly discussed, and supervisory action, where needed, to be better targeted and more effective."
Read the RBNZ media release and access McGregor's remarks for more information.
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