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New Zealand regulators have asked the chief executives of life insurers operating in the country, including AMP, to demonstrate they do not struggle with the same conduct risks as their Australian counterparts.
The Reserve Bank of New Zealand (RBNZ) and the country's Financial Markets Authority (FMA) sent letters to the CEOs today seeking written responses on the actions they have taken to address conduct risk and their plans to proactively identify such issues.
The letter was in response to a powerful inquiry that Australia's major banks are facing at home, called the Royal Commission, following a series of scandals including interest rate rigging and questionable financial advice..
The major banks in New Zealand are all owned by Australia's "Big Four" - Commonwealth Bank of Australia, Westpac Banking Corp, Australia & New Zealand Banking Group and National Australia Bank.
The FMA and the RBNZ sent a similar letter asking conduct- and culture-related questions to banks registered in New Zealand on May 4. They had until May 18 to respond.
Australian wealth manager AMP, which operates in New Zealand, has found itself in hot water with its shareholders suing it in a series of lawsuits after the Royal Commission exposed alleged criminal behaviour.
"The purpose of this exercise is for us to understand how you have obtained assurance that misconduct of the type highlighted in Australia is not taking place here," the RBNZ and FMA said in a joint letter.
"The nature and extent of the issues within financial services in Australia and the obvious cross-over in terms of entities, people and practices into New Zealand demands a strong response from the industry here, and from the regulators."
In a separate article on the RBNZ's website today, Governor Adrian Orr said the country's banks are not immune to risks and that regulators needed to step up compliance checks on the sector amid damaging revelations of misconduct by Australian lenders.
Mr Orr added the central bank is looking to build its resources to better regulate the banks, but did not provide any more details.
"The concerns that gave rise to these inquiries should be heeded, not just by Australian-owned banks, but by all financial service providers in New Zealand, including our own domestically-owned banks and insurers."
The FMA is expecting responses to its letter by June 22. It will then assess the information and schedule follow-up meetings with the institution's "core team" to agree on next steps.
"We intend to be fully open and transparent in our inquiries and interactions with you and we expect the same approach from you," according to the letter.
"We encourage early discussion of any areas where you anticipate that some remediation may be appropriate or where you are considering changes to product offerings, sales practices or business structures."