Quarterly Statement by the Council of Financial Regulators – October 2023

The Council of Financial Regulators (CoFR) held its quarterly meeting on Thursday 5 October 2023. The meeting was chaired by Reserve Bank of New Zealand Governor Adrian Orr. The Council discussed the current regulatory approach to protecting New Zealanders from financial scams, the regulatory approach to the credit unions and building societies sector, the Council’s coordinated approach to improving financial inclusion, and how the Council could better achieve and measure success in terms of its legislative mandate and the principles of good regulatory stewardship.

The Council discussed how the responsibility for protecting New Zealanders from financial frauds and scams was shared by a number of the Council’s members as well as parts of government outside the Council, and by the financial services sector itself. They noted the recent announcement by the New Zealand Banking Association, on behalf of the retail banking industry, setting out a series of initiatives to fight fraud and scams, and looked forward to seeing reports of progress in the coming months. The FMA’s Chief Executive Samantha Barrass outlined new steps the FMA is taking to strengthen its approach in this area within current regulatory settings.

CoFR discussed trends and developments in the credit unions and building societies sector. They considered the role these entities play in providing choice, diversity and competition in the deposit taking sector and noted that further insights in this regard may come as part of the Commerce Commission’s market study into personal banking services. The Council also discussed the likely impact on these entities of upcoming regulatory change and the importance of ensuring that regulatory settings were proportionate to the risks such entities present.

CoFR considered recent progress made in relation to financial inclusion - one of the Council’s five priority themes. Particularly they noted and adopted a clear definition of financial inclusion (based on the World Bank model): that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way. They discussed how the roles and responsibilities of each CoFR agency, and other government entities, affected financial inclusion and plans to coordinate and cooperate on activities that might improve the outcomes for New Zealanders in this regard. Further details on CoFR’s overall approach would be published in due course.

CoFR also considered how it could better achieve and measure success in terms of its legislative mandate and the principles of good regulatory stewardship. They endorsed four factors seen as critical to succeeding in the Council’s function to facilitate cooperation and coordination between members to support effective and responsive regulation of the financial system in New Zealand. These four success factors are: operational clarity, long-term system leadership, effective collaboration, and successful external engagement. The Council agreed a work plan to measure and improve performance along each of the four dimensions. They also discussed how the quarterly Regulatory Initiatives Calendar might be further improved to capture a wider array of planned policy reviews.