Banks ordered to show that their hands are clean

NEW ZEALAND – The country’s leading banks have been ordered to prove they are not ripping off their customers like their Australian counterparts have been doing.

A royal commission into Australia’s financial services sector has found banks have cheated customers and lied to regulators.

The Financial Markets Authority (FMA) and Reserve Bank spoke with the heads of New Zealand banks on Monday seeking concrete evidence the same was not happening here.

“We’ve asked them to provide reassurances to us that they have scrubbed their business models, and they have a basis for being confident that those issues don’t exist here,” FMA chief executive Rob Everett said.

There is no set timetable for the banks to report back, but Everett expected initial responses in a few weeks.

Much of New Zealand’s financial sector is run by local offshoots of the same organisations now in the gun across the Tasman.

Everett said there was no evidence that what happened in Australia had occurred here.

But he promised that regulators would be asking for more than just the banks’ word they had clean hands.

“Our monitoring plan is to check the assertions we’ve been given and to check that the things we’ve already seen, and make sure they stack up.”

Everett warned it only took one bad apple to irreparably damage the trust needed to manage customers’ money, and he urged banks, insurers and their fund managers to get it right.- RNZ