Towards good governance in the financial system – Reserve Bank of New Zealand – Te Pūtea Matua

The speech follows the release of a cross-sector thematic review of regulated entities’ governance practices by the Reserve Bank of New Zealand (RBNZ) – Te Pūtea Matua and the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko.

Mr Hawkesby explains how learning the governance lessons of history has shaped guidelines for good practice, both domestically and internationally.

A core part of the review was assessing the discipline boards follow in governing their activities, with well documented frameworks, policies, and processes to embed continuous improvement. With these foundations in place, more time is available to focus on strategy, conduct, culture and behaviours, which reduce the likelihood of the worst-case outcomes we have seen through history – financial failures, bailouts, systemic crises, misconduct and mis-selling.

“We observed a variety of governance practices across entities, which is why the report shares examples of good practice that others can learn from,” Mr Hawkesby says.

“A common theme we identified was the need for boards to set themselves up for success now and into the future. This is the essence of a being a good kaitiaki. It’s about being a temporary guardian or caretaker, with responsibility to hand things over to the next generation in a better position and ready for the future.”

“We hope that this work is of wider value, providing a unique opportunity to learn from others – both for other financial institutions and those outside the financial industry.”