Just how powerful....
is the banking industry lobby in New Zealand?
I have to ask because I noticed an article in the media suggesting that interest rates on bank issued credit cards will be left to be driven by market forces.
Also, I couldn't help but recall in 2010, when the nascent Financial Services industry regulations executed a deft u-turn and made professional qualifications a voluntary option rather than a mandatory requirement.
At that time, I was consulting to a smaller Dealer Group, and after taking all the members through Standard Set A, further activity in this area was promptly abandoned.
Coincidentally, (or not, depending upon your view) the Qualifying Financial Entity category was created, and the banks (and larger insurers) were handed the responsibility for the compliance behaviour of their sales and advisory personnel.
It is truly miraculous that very few QFEs - and no bank QFEs whatsoever - have reported any breaches of the regulations in the 5 years since the legislation was passed through Parliament.
At least, there have been none publicly reported to my knowledge, despite many anecdotes of bank staff churning Kiwisaver business on a regular and systematic basis.
I also understand that any moves to have financial advisers achieve compulsory levels of qualification will be strongly resisted by the Banks in the FAA Review process.
The general perception from non-banking stakeholders in the industry indicates that the Banks are given an easy ride by the regulators and the Government alike.
As if to add fuel to the fire, while the Australian regulator is cracking down on what appears to be excessive interest rate charges on credit cards - and it's hard to argue that they're not excessive - the NZ Government is taking a classic laissez-faire approach.
Contrast this with the recent experience of non-aligned Financial Advisers on both sides of the Tasman, and in particular, investment advisers.
All the recent adverse publicity surrounding shonky investment advice has been from the investment advice units attached to Australian Banks - Macquarie Bank, Commonwealth Bank, NAB - the list goes on. Yet the Banks - in the company of one or two larger insurance companies - have succeeded in shifting the focus away from these scams to have the Regulator zealously embark on a campaign against Risk Advisers' remuneration!
Rest assured, the Banks in Australia have a powerful and effective lobby.
But even their lobby has failed to achieve what their NZ counterparts have achieved - complete freedom to charge whatever rate of interest tickles their fancy on credit card debit balances.
With continuing downward pressure on interest rates, the stubborn refusal of Banks to reflect this trend in credit card interest rates is nothing short of usurious.
While non-aligned financial advisers are bending under the weight of legislation and regulation, the Banks are returning record profits, driven, not insignificantly, by eye-watering interest rates squeezed out of debt-laden citizenry, i.e. you and me.
To paraphrase the PM, it's about time the NZ Government "grew some" and pulled the Banks back into line - even the current unpopular Australian Government has had the cojones to stand up to such outrageous behaviour.
Come on John - show us yours!