Issue 392 May 15, 2018
The appointment of a Royal Commission of Inquiry into some of the practices of Commercial banks in Australia has sent ripples of anxiety in New Zealand’s banking sector.
The Royal Commission, appointed by the Australian government, is examining misleading and deceptive behaviour in the industry and the conduct which fell ‘below community standards and expectations.’
As Commissioner Kenneth Hayne said, Australia has one of the strongest and most stable financial service sectors in the world but there have been many established examples of misconduct, raising questions about cultural and governance practices.
Along with Banking, the Inquiry would look at Superannuation (Pension Contributions), Insurance and Wealth Management industries.
Australia’s ‘Big Four,’ namely, Commonwealth Bank (CBA), ANZ, National Australia Bank (NAB) and Westpac, collectively have about 80% of the country’s banking market.
As on May 4, 2018, the Royal Commission had received 5019 public submissions, of which 64% related to banking, followed by equal number of submissions relating to superannuation and financial advice.
Response in New Zealand
New Zealand banks and insurance companies have been quick to distance themselves from the evidence found by the hearings before the Royal Commission.
But as Wellington based Transparency International Inc Chief Executive Suzanne Snively said, the challenge is that New Zealand’s largest four registered banks (ANZ, ASB, BNZ and Westpac) are subsidiaries of Australia’s four largest banks. AMP is one of New Zealand’s largest insurance companies.
“It is naive to believe that the New Zealand system is different without solid evidence. It is not enough to have the industry self-disclose. This after all, is what happened prior to the current Australian inquiry,” she said.
The Australian Royal Commission’s early findings provide a wakeup call to New Zealanders. We need to make sure that we have authenticated evidence that our New Zealand banking and financial services practices and operations, undertaken for the banks own customers, have been conducted with integrity and in the best interests of their customers.
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