An inquiry into the conduct of New Zealand’s banking sector has found widespread wrongdoing across the sector. The inquiry, which follows a damning assessment of Australia’s banking sector several months ago found that 11 banks have had instances of misconduct by staff.
In the Australian bank sector inquiry fee gouging, bribery, fraud, board level deception among other instances of misconduct had been found. The sector was left battered by a Royal Commission, though no immediate recommendations for overhauling conduct and procedures was made. That will be in February 2019.
Although the New Zealand inquiry found none of that type of severe misconduct, it did find much poor lower level behaviour. Among the failures of the banks the inquiry found that they had:
- Used high pressure incentives to get staff to sell products such as credit cards which a customer did not necessarily need
- Despite knowing they needed to be rid of them, banks had dragged their feet on ending the use of incentives
- Done this despite having huge profits
Notably the failings of the New Zealand banks were not found to be of the sort that were identified in the Australian banking sector inquiry, where not only was the wrong doing widespread it pointed to much bigger problems in the industry.
Still, this is not a great look for New Zealand banks and banking. Customers have a right to be disappointed that this has happened. I hope that the inappropriately charged $23.9 million is refunded where possible and that those who were identified as making the charges are sent to ethics training.
Banking like any other sector faces ethical issues from time to time and all staff, from the C.E.O. down to the person who started their first day as a teller in a branch, have ethical responsibilities that their training should identify. The majority will to the best of their ability try to do their job and remember their ethical and legal responsibilities. But as with any other industry there will be a few rotten apples who will steadfastly refuse or otherwise prove incapable of proper conduct. It is they who must be made to move on.
Iceland jailed their bankers as a result of the Global Financial Crisis in 2008. Their economy began to grow again the following year when most other countries, New Zealand included were still in recession. I am not suggesting we do anything like that if our banks fail to meet the February deadline, but I do like an earlier idea I had of requiring bank branch managers, and higher levels to be registered with the Financial Markets Authority who would have the right to strip them in instances of serious misconduct.
That I think would make all but the rotten apples stop and think about their conduct.