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Peters wants spotlight on banks

There is support among the financial advice sector for Winston Peters' call for an investigation into banks.

Thursday, July 20th 2017, 5:59AM 1 Comment

by Susan Edmunds

The NZ First leader said there should be a banking inquiry, focusing on bank charges, the dominance of Australian-owned banks in this country and ways to improve local ownership in the sector.

He said $4 billion in profits was being "extracted out of the economy".

Banking inquiries have been held in Australia, largely related to conduct issues.

Rod Severn, chief executive of the PAA, said any inquiry that produced more transparency in a large institution was good for that organisation and for the public.

"Some of Winston's commentary is just grandstanding due to the election," Severn said.

"However there does appear to be sound reasons to hold an investigation into charges and activities.

"One must remember that the four-pillar system in Australia has created a very strong and robust banking system that was (and still is in most countries) the envy of the banking fraternity and held us and Australia in good stead when the GFC hit," he said.

"But there is no doubt this robust system costs, hence the higher bank fees we all pay. It should also be worth noting that New Zealand was probably not in a position to foster a large competitive banking environment on its own at the time.

"It needed the Aussie banks to provide that and it was the government who, at the end of the day, not only sanctioned the presence of these banks here, but also approved the sale of the other local banks to National and Commonwealth banks respectively. We have no issue with supporting the local entities, increasing open and honest competition and allowing market forces to determine pricing, failures and successes. Bring on the inquiry."

Adviser Brent Sheather said the bigger problem with banks was that vertically integrated organisations pushed their clients into their own products, despite claiming to be independent.

“One also imagines that if the National Party agreed to conduct such a review 'an appropriate independent person with the experience to conduct the inquiry'  most likely would be an ex-banker or some politician aspiring to get on the board of an Australian bank.”

The NZ Bankers Association said it had no comment.

Tags: banks financial advisers PAA

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Comments from our readers

On 20 July 2017 at 2:27 pm AFA Muggins said:
"One must remember that the four-pillar system in Australia has created a very strong and robust banking system that was (and still is in most countries) the envy of the banking fraternity and held us and Australia in good stead when the GFC hit," he said.

My Severn, perhaps you would like to look a bit more closely at the four pillar system,and how the ownership is structured:

https://seeker401.wordpress.com/2016/02/28/may-2014-who-really-owns-the-big-four-banks-in-australia/

It seems a very concentrated ownership structure that few take the time to become aware of.

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