Government accepts banking inquiry plan to boost competition

Thursday, 13 November 2025

The Government says it will act on all 19 recommendations from Parliament’s banking inquiry, and will keep the banking sector under increased scrutiny.

It has already committed to actions covered by some of the recommendations, including beefing up Kiwibank to better compete with the four giant Australian-owned banks ANZ, ASB, BNZ and Westpac.

But new moves include requiring Payments New Zealand, which is owned by banks and has been accused of going slow on the development of open banking, to reform its governance structure to better support fintech companies, and the development of real-time payments. It also recommended that the Reserve Bank Te Pūtea Matua “open the door to more overseas banks and fintechs”.

The Government has also accepted banks need to standardise some of their loan and account information so the public and businesses can more easily compare them, and shop around for the best deals.

It will also ask the Financial Markets Authority to consider investigating transaction account pricing, and will write to banks to “encourage them to consider disclosing profitability on transaction, on-call and savings accounts.”

Another action point will be making access to bank finance easier for Māori organisations and trusts, for example, removing unnecessary anti-money laundering compliance for Māori land trusts and organisations.

Importantly, the Government agreed that the Finance and Expenditure Committee, and the Primary Production Committee, would request six-monthly updates from banking regulators, and entities like Payments New Zealand, on progress.

Hearings in the Parliamentary banking inquiry were at times testy, especially when the inquiry turned to rural lending and banks’ climate emission policies, but bank chief executives successfully used them to lobby for an easing of Reserve Bank capital requirements, which they blamed for making loans, including farm loans, more expensive than they needed to be.

The Reserve Bank had already started a review of capital settings to ensure the balance between financial stability and market efficiency was achieved, the Government said, and had published a consultation paper in August on possible changes.

But more changes could come, and Finance Minister Nicola Willis had commissioned advice from Treasury on the Reserve Bank of New Zealand Act, and governance changes at the Reserve Bank were being considered.

There has been concern from New Zealand First, which drafted a “woke” banking bill, that some banks were starving some sectors, like the oil and gas sector, of funding.

The banking inquiry recommended that the Reserve Bank develop transparent national guidelines for banks on the application of climate-related risk weighting and pricing.

The Government “partially” agreed.

Willis said the select committee’s findings echoed many of the findings of the Commerce Commission’s report on personal banking services last year.

“The inquiry’s findings highlighted concerns about the high levels of banking profitability and market concentration, barriers to entry for other players, and regulatory settings,” she said.

“The Government has been progressing all the recommendations in the Commerce Commission’s report. They include giving Kiwibank’s parent company the go-ahead to raise additional capital and requiring the Reserve Bank to place greater emphasis on banking competition across a range of policies and actions.”

Scott Simpson, Minister of Commerce and Consumer Affairs, said: “This government is committed to driving competition in the banking sector, encouraging innovation and delivering a better deal for consumers.

“Monitoring and reporting on the committee’s recommendations will be co-ordinated by the Treasury,” he said.