However Reserve Bank Governor Adrian Orr had some pointed words for bank directors
"Culture comes from the top and boards and senior managers at our financial institutions need to be leading by example," he said.
"Our review of bank plans shows there is still work to do at the system-level, but there is a much bigger concern and question about the culture being instilled and fostered at governance level.
"Boards are critical in leading the cultural shift that is needed to promote long-term customer outcomes. It is critical to embed new processes and governance systems within banks, and we will be monitoring their progress with this important work."
In response to the Conduct and Culture Report banks were asked to provide to the regulators their plans to improve their systems and controls, and increase their focus on the governance of conduct risk.
"All the banks have now developed plans to address weaknesses in their systems," FMA chief executive Rob Everett said.
"They reflect our findings that there is more work to do to embed conduct risk into these firms. The real test will be how plans are executed and it is Board and senior management's responsibility to ensure they deliver good customer outcomes."
All of New Zealand's banks have committed to removing sales incentives for frontline staff and their managers, the regulators confirmed.
The two regulators concluded in last year's report that the approach to managing conduct risk was weak throughout the banking industry and that the 11 banks reviewed had not sufficiently put customer outcomes at the heart of their business in four key areas:
• Greater board ownership and accountability – including being able to properly measure and report on conduct and culture risks and issues.
• Prioritising the identification of issues and accelerating remediation
• Prioritising investment in systems and frameworks to strengthen processes and controls
• Strengthening staff reporting channels, including whistleblower processes for conduct and culture issues.
MORE TO COME
