FMA says NZ banks have paid $109m to 952k customers in compensation for 266 problems

The Financial Markets Authority (FMA) says bank customers have received $109 million in remediation payments since the conduct and culture review of New Zealand banks in 2018.

The FMA says a total of 266 separate issues have been remediated through that $109 million, across 11 banks with 952,000 customers impacted.

This is on top of the $43 million of remediation paid to customers of life insurers, stemming from 225 issues, following the 2019 review of their conduct and culture.

The FMA and Reserve Bank conduct and culture reviews followed the Australian financial services royal commission, with banks and life insurers asked to report on any issues requiring remediation. The FMA says efforts continue to improve financial institutions' practices and systems.

“The remediation work shows the extent of weaknesses in the systems and processes across banks and life insurers. This demonstrates the significant amount of work required by financial institutions to ensure they are identifying, rectifying, and remediating issues which, to date, have impacted over 1.5 million customers with a total sum of $150 million returned so far," FMA Director of Banking and Insurance Clare Bolingford says.

“We acknowledge the substantial work by banks and insurers to date to fix their customer issues - especially those firms tracing back further than they had to. We note that over the past 12 months boards have displayed a greater understanding of what needs to occur to achieve consistent fair customer treatment. It is likely there’s more self-reporting to come as firms continue these efforts. The more firms have looked, the more problems they’ve found. You can reasonably expect our future monitoring activities to consider how well firms have completed, and reported on, these matters,” says Bolingford.

“This work has also helped the FMA deepen its understanding of the bank and insurance sectors, and has enabled improved engagement with the industry, in seeking to root out conduct problems and prioritise the interests of customers. Our ongoing engagement over this period will support the implementation of the new Conduct of Financial Institutions Regime in shaping conduct principles and practices, and preparing for licensing from next year. Firms will be in a better position to demonstrate how they are treating customers fairly through their fair conduct programmes.”

Bolingford recently spoke to interest.co.nz about the FMA's plans to start regulating the conduct of financial institutions in an episode of our Of Interest podcast.