FISA Forward

The 2019 New Zealand Finance Integrity System Assessment (FISA) is the first ever assessment of the integrity systems of any country’s financial system. It covers a wide range of financial organisations, including insurance, and, government and industry agencies with oversight and regulatory roles in the finance sector[1]. This evidential assessment, including an online self-assessment questionnaire, covers the financial system.  It is addressed to all deposit-taking organisations, insurance companies and their regulators.  Financial organisations know that public and international trust is vital for New Zealand’s future and that corrupt behaviour, corruption scandals, collusion, bribery and lack of transparency, damage that trust.

FISA is designed to gain an objective and independent view of the integrity of a country’s financial system. The FISA will provide customers, citizens, communities, civil society organisations, government and businesses detailed information about the way that the financial system conducts itself.  It identifies and seeks to prevent poor conduct through reinforcing core ethical values and culture which contribute to strengthening the integrity systems which prevent corruption.

FISA is not a review. It is a pro-active tool aimed at self-assessment and at widening the discussion about the priorities for New Zealand to strengthen its integrity systems, the best way of protecting against corruption, whether from internal or external sources.

Armed with this knowledge, citizens and customers can both identify good conduct and push for improvement. At the same time, financial organisations can choose to set clear priorities to develop their activities aimed at preventing corruption while seeking the additional returns that come when they adopt a pro-active role to promote their integrity.

Through these additional returns, our country’s banks, finance companies (deposit takers and lenders) and insurers will be able to continuously innovate, upgrade their services and confidently engage with international capital markets to assist in minimising the risk premium inherent in interest rates for New Zealand household and business borrowers.  

The global financial crisis was a dramatic event that impacted strongly on economic and individual wellbeing – many financial organisations were found wanting. Yet still today, internationally, while there was change to the structures of such institutions and organisations, many of the features that support unethical behaviour continue to exist. The 2019 Hayne Review findings for Australian Banks and Insurance companies found evidence of weak integrity systems including potential criminal conduct. While the 2018 high-level conduct review for New Zealand by the FMA and RBNZ found less misconduct here, there was evidence that governance and integrity systems require immediate improvement.  In addition, cyber currency trading, peer-to-peer lending, crowd funding platforms and other technologies are a growing part of the financial system. It is important to ensure then that the financial integrity system is resilient and that financial organisations are robust enough to manage the risks of disruption while benefiting from the opportunities.

Internationally, reform in banking and financial systems is still required.  In contrast, in New Zealand during and since the GFC, the financial sector (including banks, finance companies, financial advisers, product providers and others), has seen one of the most comprehensive changes in regulatory regime any sector has ever been subject to. It has involved significant investment in systems-changes for financial organisations, and therefore stepping up to maintain the features of a robust, self-regulating financial system, critical to our future.

The FISA initiative, then, is one where yet again New Zealand has already made changes and is able to show the way forward. New Zealand financial organisations can demonstrate their willingness to be accountable, potentially reducing the costs of regulation while freeing up resources for quality customer services that are sustainable for the future.

[1] See Glossary for a definition of financial organisations