These are challenging times for everyone as we learn to live in different ways to combat the spread, and limit the human cost of the COVID-19 virus. Staying in your bubble is not an easy thing to do. We are fundamentally social beings. The routine of going to work or school, catching up with family and friends or going for a walk on the beach is part of who we are – and its temporary absence is hard. But we are doing it. We are proving we are responsible for our own health, and the health of others, by keeping our distance.
Part of behaving responsibly can mean challenging the way things have been done in the past, and adopting new and innovative ways of dealing with what is in front of us. New Zealanders can take comfort in the innovation, commitment and responsibility being shown across the financial sector to address their needs at this uncertain time.
A lot of this has been led by the Council of Financial Regulators (COFR), an umbrella group of regulators and agencies that oversees the performance and risks across the financial system. COFR members include familiar organisations – the Reserve Bank of New Zealand, The Financial Markets Authority (FMA), The Commerce Commission, The Ministry of Business Innovation and Employment and The Treasury.
Through collective leadership, COFR has enabled and driven the delivery of Government-led initiatives such as the mortgage deferral scheme, new Business Financing Guarantee scheme and changes to tax requirements. We’ve reprioritised the regulatory reform landscape so financial service participants can focus on supporting their customers’ needs, knowing there will be time and space to tackle the challenges ahead.
For example, the Reserve Bank has postponed new capital requirements on banks and a review of rules for insurers. We are banking the banks and supporting markets and institutions to function smoothly and effectively. The FMA has postponed or cancelled planned monitoring work for licensed providers including on-site visits and reduced non-urgent information requests.
This reprioritisation is a balancing act. Collectively COFR agencies are promoting additional risk taking by financial firms so liquidity generated through Government initiatives flows to households and businesses. At the same time we have an important role in ensuring our financial institutions remain sound and operate with appropriate conduct and culture.
The FMA has been working to ensure firms understand its expectations about putting customers’ interests first and consider how their customers’ circumstances may have changed over recent weeks. For example, KiwiSaver investors are experiencing significant volatility in their balances and the FMA wants to ensure New Zealanders remain confident that the system for their retirement savings is sound.
The Commerce Commission has published new guidance to help lenders of consumer credit understand how to lend responsibly in a COVID-19 environment and help borrowers facing financial difficulties understand options available to them. Where businesses need to collaborate to provide essential goods and services, including in the financial services sector, the Commission is also providing guidance to businesses on the scope for legitimate collaboration.
We expect and encourage responsibility among the institutions we regulate, and the businesses that form our economy to support customers and future generations of New Zealanders.
Many of the measures to support the economy and the financial system are through banks, which know their customers, and are best placed to respond to their needs and see them through these unprecedented times.
This is the time for banks to repay the faith that financial regulators and the Government have placed in their hands and step up to the plate. We look forward to them delivering lending and other affordable long-term customer-focused solutions to ensure New Zealand returns to a vibrant and dynamic business community. We will continue to encourage and support these activities, and expect transparent reporting around the success of their actions.
As much as this crisis is challenging, it does present huge opportunities for New Zealand to be global leaders. To do this, we all need to keep working together, and optimise the opportunities for everyone to think courageously and innovatively about the environment in which they operate, and about inclusion and productivity.
Behaving responsibly means being compassionate as well and ensuring people are not taken advantage of. Regulators remain vigilant against improper conduct or unfair practices at a time when some may find themselves under financial stress and in need of support.
Now is the most important time to all work together. New Zealand has shown its strength of character to flatten the curve. The whole financial system must play its part and show it is keeping credit flowing to households and ensure it is treating customers fairly in all interactions. New Zealanders should expect nothing less.
This release was first published on Stuff.