Government to Remove Personal Liability for Bank Directors and Senior Managers

Highlights:

• Liability Shift: The New Zealand government will remove personal liability for directors and senior managers of financial institutions, easing the regulatory burden on executives.
• Laws Eased for Financial Institutions: Regulations will be adjusted to reduce penalties for banks that fail to provide accurate information, with class action suits currently underway against ANZ and ASB for such issues.
• Consumer Credit Overhaul: A shift towards a risk-based approach will streamline financial regulations, including simplifying licencing and reducing red tape for institutions.

Major Regulatory Shift Announced

The New Zealand government has announced significant changes to the liability framework for directors and senior managers of financial institutions. Commerce and Consumer Affairs Minister Andrew Bayly revealed during the Financial Services Council conference that the government will remove the personal liability requirement linked to due diligence for these leaders. The decision follows the introduction of a licencing framework that aims to ensure regulatory compliance without placing undue personal responsibility on executives.

Easing Liability for Financial Institutions

In addition to easing personal liability, the government is revising laws to reduce the penalties for financial institutions that fail to provide or provide incorrect information. This is especially timely, as ANZ Bank New Zealand and ASB Bank are currently involved in a class action lawsuit for such failings. Bayly noted that while accountability for poor lending practices is essential, imposing personal liability on directors and managers was deemed excessive. This change is expected to foster more balanced and less conservative lending practices across the sector.

Consumer Credit Regulation Overhaul

The changes reflect a broader overhaul of consumer credit regulations. Bayly emphasized a shift towards a more proportionate and risk-based approach, moving away from overly prescriptive requirements. The government also intends to streamline conduct regulations, ensuring that financial institutions' programmes align with their business nature while continuing to protect consumers.

Disclaimer for Kapitales Research

The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions.

Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices.

Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research.

Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com