New Zealand Law Society - Policy on banks' reporting of breaches to aid transparency

Policy on banks' reporting of breaches to aid transparency

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The Reserve Bank will be reporting material breaches from banks on its website from next year, in an effort to improve transparency and market discipline.

The bank says the decision follows public consultation, and ongoing discussion with stakeholders on a new framework for the reporting of banks’ breaches. The Reserve Bank has published a summary of submissions and final policy decisions on the reporting and publication of breaches by banks.

The new policy will require a bank to report promptly to the Reserve Bank when there is a breach or possible breach of a requirement in a material manner, and report all minor breaches every six months. Only actual material breaches will then be published on the Reserve Bank’s website.

“The policy aims to enhance market discipline by ensuring prompt breach reporting and publication, and by making it easier to find and compare information about banks’ compliance history,” says Geoff Bascand, Deputy Governor and General Manager Financial Stability.

“It also encourages bank directors to focus on materially significant issues and the management of key risks rather than concern themselves with relatively minor issues.

“We will be further discussing the implementation of this policy directly with banks, and at this stage we expect it will take effect from 1 January 2020,” Mr Bascand says.