The New Zealand government revealed that it is reviewing Commissioner Hayne’s final report and its implications for the country.
New Zealand’s Finance Minister Grant Robertson and Minister for Commerce and Consumer Affairs Kris Faafoi described the final report for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry as “concerning”, adding that the government will “closely analyse” the outcomes of the commission and whether Commissioner Kenneth Hayne’s recommendations should be implemented in the country.
They noted that the government has already made a commitment to ensure the interests of financial services customers are protected, as prioritising profits over customers is “unacceptable”.
Financial services institutions in New Zealand have already been “on notice”, the ministers added, after the Financial Markets Authority (FMA) and the Reserve Bank of New Zealand (RBNZ) found “a number of issues with bank and insurer conduct” as well as “gaps” in how they are regulated after reviewing conduct and culture.
“Some of the issues are similar to those highlighted by the Australian royal commission, but not as widespread,” Mr Robertson said.
“We will look closely at the recommendations of the royal commission to see whether they should be implemented here.”
The financial sector in New Zealand has accepted the findings of the conduct and culture review, Mr Faafoi noted, adding that he expects the March report from financial institutions to demonstrate “significant measures to ensure customers were back at the heart of decision-making”.
“We have been clear that we expect to see things change and a balancing of the need for profit with banks delivering on the privilege of operating here,” the Commerce and Consumer Affairs Minister said.
“Further, in light of the FMA RBNZ report on insurer conduct, last week we agreed that we would fast-track customer protection measures across the financial sector.
“New Zealand will have a regime where banks and insurers are entirely focused on good outcomes for the consumer.”
The Financial Services Legislation Amendment Bill, which is close to a final reading in parliament, will introduce “a clear duty for anyone giving advice to ensure a good customer outcome is the priority”, Mr Faafoi said.
“Consumers are at the top of my mind because unless we share New Zealand’s prosperity more fairly, our economy is not going to deliver for New Zealanders,” he continued.
Additionally, amendments to the Credit Contracts and Consumer Finance Act are currently underway to address “irresponsible lending and debt collection practices”.
“Officials are already working on the fast-tracked broad suite of measures needed to remove regulatory gaps across the finance sector,” Mr Faafoi said.
“We will consult on these in May, and this will run alongside work we already have underway to update insurance contract law.”
Royal commission effects flow over to NZ
Bruce Patten from Loan Market NZ has previously told The Adviser that the after-effects of the royal commission had already crossed over the Tasman because some of the financial institutions that were under intense scrutiny – such as ANZ Bank, Westpac, and AMP – also operate in New Zealand.
For example, he explained that when ANZ and Westpac make a credit policy or other change, the other two of the big four, ASB Bank and the Bank of New Zealand, tend to follow suit.
Despite the paperwork becoming “ridiculous” as a result of credit policy changes, Mr Patten also pointed out the silver lining that the royal commission has been driving New Zealanders to the broker channel, with the broker market share believed to be back above 40 per cent.
“The broker market share has grown much like it has in Australia because clients are seeing all the negative stuff come out about the banks. They're tending to go more to advisers because they feel that they will be better looked after and get more choice,” the Loan Market NZ broker said.
In Australia, there have been concerns over the sustainability of the broking industry, and the subsequent impact on consumers, if Commissioner Hayne’s recommendations – including the banning of trail commissions – be implemented by the government.
In some international markets, brokers have been able to operate with little or no trail for years. For example, in the UK, trail commissions are not paid at all, while in Canada and New Zealand, they’re only paid by some lenders. In the Netherlands, the industry operates on a fee-for-service model, where brokers and lenders both charge customers a mortgage arrangement fee.
Both major political parties have expressed their intention to take on board the royal commission’s recommendations.
[Related: Royal commission impact hits New Zealand]
Tas Bindi is the features editor for The Adviser magazine.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.
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