Big retail banks have a role so important in the social and economic life of a country that they need a culture all of their own. They are neither a pure business nor simply a public service but a combination of both. They need to remain profitable — if a major bank fails the whole economy shudders — and they need to provide a secure service for small personal savings as well as for the all the companies that operate on overdraft.

Banks are indeed "too big to fail", which means that even in New Zealand where they have no explicit government guarantee, they know any Government would have to bail them out. That comfort could make them careless, or it could make them more conscientious, mindful of their social and economic responsibilities. Either way, it does no harm for them to face the occasional public examination such as those in New Zealand have just received.

The four-month review of their conduct and culture by the Financial Markets Authority and the Reserve Bank has resulted in a report this week which, while not a clean bill of health, raises no major problem. The regulators' most serious concern appears to be that bank staff have incentives to sell additional savings products to customers.

Their recommendations include removing all incentives linked to sales measures and revising the sales incentive structure for frontline staff as well as all levels of management. Their report prompted Consumer NZ to call for regulations "to protect customers from being sold products they don't need" and the Prime Minister warned the banks to "lift their game" or the Government would act. They have been given until March to produce a plan of improvement which would include getting rid of sales incentives.

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But not so fast. Big retail banks serve a great many small savers who are not financially sophisticated. These people leave their money in term deposits even when interest rates are low and the banks will be doing quite well with the money. It is quite likely both the bank and the customer can do better if the money was invested for a better return. What harm does it do to give bank staff incentives to look into these customer's accounts and offer advice to them?

Commissions are generally proscribed in financial advisory services because the advisers have been engaged by the customer who has a right to expect they have no conflict of interest. But when a bank representative offers advice to its customers they know the bank's interest is being served too. It would be a pity if all such advice ceased because staff could not be given incentives to provide it.

The review came after pressure built for New Zealand to match an intensive inquisition in Australia and regulators here appear to have looked very hard for problems. Now Jacinda Ardern wants them to respond in some way to the report of the Australian royal commission due in February. The result may be more regular audits of banking on both sides of the Tasman. So long as these exercises do not become political witch hunts they should do no harm.