New Zealand's bank watchdog is looking to crack down on bank directors as the industry faces ongoing scrutiny from regulators in the wake of Australia's Royal Commission into financial service misconduct.
Documents released to the New Zealand Herald under the Official Information Act show the Reserve Bank is planning a range of initiatives, including more guidance on how banks manage risks and a review of bank corporate governance policy.
That could include limiting how long an independent director can be on a board, limits on the number of directorships they can hold at any one time and requiring directors to have certain financial sector experience.
The regulator is also looking at changing its suitability policy for becoming a bank director to require banks to undertake ongoing assessments of their directors and senior managers.
A training programme for new bank directors run by the Institute of Directors is also on the cards.
Currently, New Zealand's banks run under an attestation system where bank directors are required to attest that their banks are compliant with the Reserve Bank's regulatory requirements.
The central bank accepts these attestations without reviewing, examining or auditing the process.
That system came under fire by the International Monetary Fund last year which said New Zealand was too reliant on self-discipline and market discipline, and could do more to step up its regulatory discipline.
In a joint report from the New Zealand Council of Financial Regulators and the Commerce Commission to Finance Minister Grant Robertson last month the Reserve Bank said it had undertaken a review of the attestation process last year and had increased its engagement with bank boards as a result.
"As a consequence of the review of the directors' attestation regime, the RBNZ has undertaken to increase its regular supervisory engagement with the 10 largest locally incorporated banks."
The report said that would include regular meetings between its deputy governor and the full boards of the banks.
"The first of these meetings was held recently with one of the major banks, and a significant part of the discussion focused on the [Australian Royal] Commission and how directors in New Zealand could be comfortable that the issues raised across the Tasman in their parent banks and in other institutions were not present here in New Zealand."
The report did not name the specific bank.
The Reserve Bank also noted in the report that its increased engagement with bank boards would give it greater opportunities to gain insights into the bank's culture and to communicate any concerns to directors.
The move comes on top of action taken last month in which Reserve Bank governor Adrian Orr and Financial Markets Authority chief executive Rob Everett met and wrote to New Zealand's major banks calling for them to prove they are different to their Australian counterparts.
The banks had until May 18 to respond to the letter in writing as to the procedures they were following to ensure the problems occurring in Australia were not happening here.
Australia's Royal Commission has revealed a range of poor conduct including AMP charging fees for no advice and lying to the regulator about it, and the Commonwealth Bank of Australia - the parent of ASB - admitting it charged fees for advice to dead clients.
An initial report on the Australian inquiry is due on September 30 with the final report set for February.
New Zealand Bankers' Association deputy chief executive Antony Buick-Constable said: "The New Zealand regulators have annual work programmes to improve the governance and operations of our banking environment. Banks here work regularly with them on these initiatives. These particular ideas were covered in a speech in February and the industry will work with the Reserve Bank on them."