One of the most important aspects of the financial markets all over the world is regulation. Regulation ensures that no unfair practices are allowed in the markets and helps retail investors in participating in the markets without the fear of being taken for a ride. On the other hand, bankers prefer to have relaxed regulations so that they can introduce more and more investment products that could ultimately result in higher profits. Like many other developed nations, New Zealand has a highly developed financial sector as well, and over the years, it has gained a lot by way of importance. However, in a fresh development, the country’s authorities are looking for ways to ensure that the actual end customers get a fairer deal from the financial industry.
Kris Faafoi, the Commerce and Consumer Affairs Minister of New Zealand has stated that the government is looking to introduce a new regulatory framework to monitor financial conduct in the country. Faafoi stated that the new regime will look to ban certain things that are solely meant for the profits generated by banks. The minister specifically spoke about sales which are made with targets in mind, and over the years, it has been seen that such sales prove to be damaging to consumers.
However, Faafoi went on to state that there is a range of other problems that need to be tackled as well in order to make the financial sector fairer towards customers. He said,
Those reviews by the Reserve Bank of New Zealand and the Financial Markets Authority (FMA) have also highlighted other problems in the banking and insurance sectors, which include weak systems for managing conduct risks and ensuring good conduct is a priority in their business.
According to reports, the new regulatory framework is going to include a conduct licensing system that is meant for insurers, banks and other non-banks depository institutions. The move aims to bring about more transparency and also ensure that customers are treated better at all time. In addition to that, incentives paid out to bank employees for meeting sales-based targets are also going to be abolished. The authorities in New Zealand are determined to make the banking sector far more transparent and customer friendly. Considering the banking scandal that unraveled in its neighboring country Australia recently, it is definitely a step in the right direction.
