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While New Zealanders adjust to being rocked by earthquakes, the Americans (and the rest of the world) are adjusting to being rocked by an election. Amongst the things that anger both Donald Trump’s and Bernie Sanders’ supporters is the greed of Wall Street firms.
Indeed, part of Trump's electoral success was founded on espousing widely shared bleak views of the US economy, that were described as being caused by Wall Street. And these are widely shared views - The London Economist found evidence that two-thirds of Americans think the economy is rigged in favour of the rich and a higher proportion believe that their politicians don't care about the ordinary citizen.
A factor is that for the last decade in the US, the purchasing power of average wages has remained stagnant. While some top incomes have risen despite the Global Financial (GFC) between 2007 and 2014, the wages of already low-income earners declined. Along with this, the job-certainty of low-skilled workers has been especially hard hit.
For many Americans, Wall Street is represented by their bank - banks who responded to the GFC by foreclosing on their mortgages and pushing their families out of their homes.
The experience here of the GFC, while significant, has been less dire than in the US. The impact of the GFC was buffered in New Zealand due to the quality of New Zealand banks. New Zealand’s 4 largest banks are supported by the strength of the balance sheets of their Australian parents who maintained strong credit ratings and were amongst the world's most stable banks during the GFC.
To find out whether our financial system has integrity, Transparency International New Zealand (TINZ) is developing an assessment methodology, the “2017 New Zealand Financial Integrity System Assessment” (FISA). View the draft assessment.
It will be the first ever review of the strength of the integrity system of any country’s finance system, covering the RBNZ, Financial Markets Authority, DIA, MBIE, Commerce Commission, Banking Ombudsman, the Insurance and Financial Services Ombudsman, Financial Services Complaints Limited, Financial Disputes Limited, the payments system, registered banks, non-bank deposit-taking finance companies, co-operative credit unions and savings societies.
The assessment will provide customers, citizens, communities, civil society and businesses with detailed knowledge of the way that the finance system prevents corruption, reinforces core ethical values and how these factors both strengthen the integrity of the system and of the organisations that make up the system.
Armed with this knowledge, citizens and customers can both identify good performance and push for more effective service and product delivery.
FISA aims to evaluate whether financial organisations demonstrate an effective approach for managing the prevention of corruption. There’s more – the evaluation is also concerned about the resources available to continue to successfully combat corruption. So, there is also an evaluation of whether organisations adopt a proactive role for realising the benefits of their integrity.
International reform in banking and financial systems isn’t even on the radar. In contrast, the New Zealand financial sector as a whole has undertaken one of the most comprehensive changes in regulatory regime of any other local industry sector and any other country’s international financial sector.
The improved detail of our regulatory regime should not overshadow its purpose – commitment to the broad spirit and culture of ethical integrity.
And so it is that TINZ is putting its draft FISA out for consultation. Everyone is encouraged to take a look at the draft assessment and provide feedback. The knowledge about the features of an ethical banking system gained during the consultation is an important basis to then understand the findings of the assessment when they are published in the second half of next year.
Suzanne Snively, Chair
Transparency International New Zealand Inc.