News & Thinking

“Social licence” in the financial services industry

Contributed by:

Nick Summerfield

Read more from
Nick Summerfield

“Social licence” in the financial services industry – the Hon Grant Robertson speaks to Jack Tame at the Financial Services Council “Towards Wellbeing” Conference 2019

The financial services sector needs to look at its social licence, according to Finance Minister, the Hon Grant Robertson.

Speaking at the Financial Services Council “Towards Wellbeing” conference, Hon Robertson said the financial services industry needs to look at its social capital, and how to operate within communities to build financial prosperity and security.

When questioned by Jack Tame on the prospect of a Royal Commission here in New Zealand, Hon Robertson was firm in saying that New Zealand does not need to follow Australia down the path of a Royal Commission.  He expressed the Government’s desire to act and make changes now rather than wait for a Royal Commission, which in his view would just delay action.  The Minister wouldn’t be led on whether this position would change as part of any coalition deal with NZ First in 2020.  Instead, he wants to see meaningful change to build the sector’s social licence, and signalled again that the Government will be introducing “smart” regulation to lift confidence.

The Minister linked the sector’s approach to conduct and culture issues with the Government’s focus on Wellbeing.  He encouraged the sector to focus on customer centricity, and to deal with bad behaviour without allowing it to fester.  He connected this to the four-dimensional focus of the Wellbeing budget – Money, People, Environment and Communities.  The Government recognises the contribution and impact of the sector in each of those areas, and the Minister voiced the desire for sustainable investment frameworks to advance the overall wellbeing of New Zealanders.

Hon Robertson acknowledged that further debate is needed on changes to capital requirements for the banking sector – the questions being “how big and how fast”.  Changes will clearly have an impact on New Zealand’s rural sector (who must be feeling under fire on all fronts with the Freshwater rules consultation and the impact of climate change targets).  The Minister distanced himself from discussions between the Reserve Bank and the trading banks on this topic, noting that the Government’s job is to ensure New Zealanders have confidence in the sector.

Moving to the future of KiwiSaver, unsurprisingly the Minister wants KiwiSaver to grow and for more people to invest in KiwiSaver.  He shied away from any suggestion of a compulsory savings policy, but agreed the Government does want as many people saving as possible.  Currently, over 1 million New Zealanders are not contributing to KiwiSaver.  The question is how to tackle that in order to avoid the Super [Superannuation] ticking time bomb.[1]

On “how to use KiwiSaver to deepen New Zealand’s capital markets?”, the Government is open to new ideas, and will also look at the recommendations from the Capital Markets 2029 review.[2]  Over and above that, the Minister noted that the Government has put skin in the game, with the $300m “early stage” capital markets fund and the Sustainability Fund.

Jack Tame followed by asking why only 9% of the $180 billion held by ACC, KiwiSaver and NZ Super is invested in New Zealand.  Unfortunately the Minister didn’t have time to answer that question as he was heading back to Parliament (and the spiralling Labour Party sex scandal), however he did say the Government sees huge opportunity in the agri-tech and clean energy sectors.

Looking forward, it seems clear that the current Government will introduce further regulation to a sector already grappling with the new regulatory regime for Financial Advice.

Ministers Grant Robertson and Kris Faafoi have said that they ultimately want to fast track new legislation through Parliament to achieve the following:[3]

  • “Clearer duties on banks and insurers to consider a customer’s interests and outcomes, and to treat customers fairly.
  • “An appropriately resourced regulator to monitor the conduct of banks and insurance companies, with strong penalties for breaching duties.
  • “Changes applied to both banking and insurance, since the issues identified in both are similar. There are also overlaps between the sectors, with banks often selling insurance products.
  • “A strong response to internal sales incentives and soft commissions.”

The Ministers intend to introduce legislation to Parliament by mid-2020 (acknowledging this is an ambitious timeframe).  We are watching developments with interest, and hoping the Government stays as close to the objective of “smart” regulation as possible.

Anthony Harper has extensive experience in conduct and culture issues, and are actively supporting clients across the financial services sector on these issues. If you have any questions, or need assistance in your business, please get in touch.


[1] The Financial Services Council has published a discussion paper on this topic ‘KiwiSaver 2050, Pathways to the Future’, dated September 2019, available at

[2] Capital Markets 2029 Taskforce, ‘Growing New Zealand’s Capital Markets 2029’, report dated September 2019 available at

[3] Joint Press Release from Finance Minister Grant Robertson and the Minister for Commerce and Consumer Affairs, Kris Faafoi, ‘Govt to act to protect bank, insurance consumers’ dated 29 January 2019

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply