Reserve Bank Act review: Greater consumer, client and Treaty protections needed

Julie Haggie
TINZ CEO

Julie Haggie

Chief Executive Officer
Transparency International New Zealand

Reserve Bank Act review

In November 2017 the Government announced it would undertake a review of the Reserve Bank of New Zealand Act 1989. It was intended to create a modern monetary and financial policy framework. The review is now in Phase-2. This looks at the financial policy provisions of the Act that provide the legislative basis for prudential regulation and supervision, and the governance framework around them.

Submission key points

Transparency International New Zealand (TINZ)’s submission contained the following key points:

  • Any amendment to the objectives of the Bank must be broad enough to enable the Reserve Bank to take into account environmental sustainability when discharging its responsibilities. This ought to include the impact of climate change on the future stability of New Zealand’s financial system.
  • Any review of the objectives of the Bank is an opportunity to apply the principles of partnership, participation and protection (that underpin the relationship between the Government and Māori under the Treaty of Waitangi) to monetary policy and regulation. It is disappointing that it is not featured in the consultation documents.
  • The Bank should establish a process of annual NGO dialogues, as conducted by the Dutch Central Bank (De Nederlandsche Bank, DNB). Such meetings would offer the opportunity for the Bank to share and discuss research. They would also enable NGOs to share and discuss their concerns and priorities for working with the financial sector.
  • TINZ supports depositor protection insurance, and made a broad range of suggestions including:
    • enhanced transparency and consumer protection
    • processes to limit complacency or risky behaviour
    • improved clarity and readability of information
    • improved depositors’ access to comparable information
    • better information where limits on protection are in place
    • support for depositors to understand the risks of lack of protection insurance
    • reporting in order to limit risky behaviour
    • clarity and timeliness for consumers where there is failure
    • insurance that is fit for purpose and not applied if it is not needed
    • ensuring that compensation cannot be offset against mortgages. 

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