A Radio NZ report says the Financial Markets Authority and the Reserve Bank spoke to banking chiefs on Monday in the wake of damning revelations from Australia's Royal Commission into Misconduct in the financial services industry.
The inquiry has revealed a range of poor conduct including AMP charging fees for no advice and lying to the regulator about it and the Commonwealth Bank of Australia - the parent of ASB - admitting that it charged fees for advice to dead clients.
The regulators have previously said they were watching the inquiry with interest and would look closely at its findings with the first report due out on September 30.
But that approach seems to have stepped up a notch with RNZ reporting that the regulators expected to hear back from the New Zealand banks in the coming weeks.
FMA chief executive Rob Everett told RNZ it had asked the banks to give it assurances, including in writing as to the procedures they were following to ensure the same problems occurring in Australia were not happening here.
"We're asking them to give us assurances, including in writing, as to the processes they've followed to check themselves against what's coming out of the Royal Commission. And as
"We've asked them to provide assurances to us, the RB and the FMA, that they have scrubbed their business models and that they have a basis for being confident that these issues don't exist here."
Everett said it would also been testing those assurances to make sure they stacked up.
He said the regulator already had a lot of work already on track to look at the sector.
"What's been highlighted in the royal commission in Australia is really ugly. I think it's devastating for the industry, the stories that are being told.
"Most of the issues that we've heard are issues that were well known to the regulators, they are issues that have surfaced before. So we have been spending time here in New Zealand making sure that our work plans react to that and where we're looking is somewhat driven by the experience in Australia.
Everett said it would be naive to say there weren't pockets of problems in the financial services sector in New Zealand.
"We certainly see things that could be improved."
But it hadn't seen evidence of the systematic issues seen in Australia.
"To date, we haven't seen any evidence of systemic abuses along the lines of the Australian industry, but as we've said to the New Zealand banks, we can't afford to be complacent, we really have to up our game to make sure that those same issues aren't being replicated here."
Everett said the Australian inquiry upped the temperature on the New Zealand arms of the Australian banks which are the largest players here and include ANZ, ASB, Westpac and BNZ.
If it saw areas where the law had been breached or there was poor conduct it would take action, he told RNZ.
Everett said trust in Australia's banking sector had been damaged and the United Kingdom and the United States also had problems with trust in their banking sectors.
To date, New Zealand had been better but it would only take one or two blow-ups to damage that reputation, he said.
Earlier this week Sam Stubs, the founder of KiwiSaver provider Simplicity called for New Zealand to have its own banking inquiry.
But Everett said he did not believe that was needed at this point as New Zealand was already reviewing its insurance law, consumer credit laws and financial advice law.
" I would rather let that work progress before anyone leaps to any conclusions about whether or not to have an inquiry," he said.
While there was no set timetables for the banks to report bank it expected the first reports in the next few weeks.
The New Zealand financial services businesses have defended themselves by saying the industry is different here.
Last month New Zealand Bankers' Association chief executive Karen Scott-Howman said New Zealand's regulatory environment was very different from that in Australia.
"The Australian-owned banks operating in New Zealand are separately governed and regulated under New Zealand law," Scott-Howman said.
"The New Zealand financial services sector — banking, wealth management, superannuation, KiwiSaver and insurance — is well managed, well regulated and has high levels of customer trust and confidence."
