Banks have been given two weeks to outline what steps they have taken to convince financial regulators that customers here are not being ripped off like their Australian counterparts have admitted doing.
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The Financial Markets Authority (FMA) and the Reserve Bank spoke to the heads of the banks on Monday in the wake of last week's revelations at the Australian royal commission into the financial services sector.
In a follow-up letter from Reserve Bank governor Adrian Orr and FMA chief executive Rob Everett, they said it was not enough for the banks to invite them to come and look at their operations.
"As we discussed on Monday, the window for you to demonstrate to consumers, regulators and other stakeholders that they can have full confidence in the financial services industry in New Zealand is narrow, and we encourage proactive leadership from the retail banking sector."
The regulators are demanding the banks provide documents that show how they conduct themselves when dealing with customers, and where that may fall short of the regulator's expectations.
The banks must also provide details about any plans and actions they have taken in response to the royal commission, any other work done to identify and fix bad conduct, and how they ensure detrimental outcomes for customers do not happen again.
The banks have until 18 May to comply.
The authority and Reserve Bank will then assess the information provided, and follow up with the banks individually.
