“It’s a useful step towards sorting out a very thorny and expensive compliance issue for us. We understand US moves to clamp down on tax evasion by Americans living around the world. But without an inter-governmental agreement, the US law’s provisions are virtually unworkable,” said Hope.

The New Zealand Bankers’ Association today applauded the government’s decision to seek an inter-governmental agreement between New Zealand and the United States which will help financial institutions comply with new US tax reporting requirements.

The Foreign Account Tax Compliance Act, also known as FATCA, is designed to ensure US citizens resident in other countries meet their tax obligations. It requires foreign financial institutions, including New Zealand banks, to identify and report on customers who are US citizens.

“The government’s engagement on this issue will be welcomed across the financial sector,” says New Zealand Bankers’ Association chief executive Kirk Hope.

“It’s a useful step towards sorting out a very thorny and expensive compliance issue for us. We understand US moves to clamp down on tax evasion by Americans living around the world. But without an inter-governmental agreement, the US law’s provisions are virtually unworkable.”

The agreement is expected to provide a practical way of meeting FATCA’s aims and allowing New Zealand financial institutions to comply. “While our banks will still incur costs around designing and implementing customer identification and reporting systems, we see this as a positive step,” says Hope.

Large profits in the banking sector  needed to be considered alongside the contribution banks made to the economy, Mr Hope says. “Last year banks contributed around $6 billion to our economy through the $4.5 billion they invest in running their businesses here, and the $1.3 billion they paid in tax.”

KPMG’s Financial Institutions Performance Survey (FIPS) report for the quarter to 30 June 2012 confirms that New Zealand banks are well placed to meet ongoing challenges.

Those challenges to the banking sector, and the wider New Zealand economy, include the continuing European debt crisis and a slowdown in the Australian economy, our largest trading partner.

“We need strong banks to support our economic growth. You just need to look at parts of Europe to see the devastating alternative,” says New Zealand Bankers’ Association chief executive Kirk Hope.

“The banking sector’s core funding ratio is at 84.3%, well above the Reserve Bank’s current minimum ratio of 70%. That means banks are sourcing more funds from domestic savings and longer term wholesale funds, and are less reliant on shorter term overseas funding.

“On top of this, our banks are set to meet the Reserve Bank’s new minimum level of capital they must hold, which is based on the Basel III international standards.”

The quarterly report revealed that banks’ average interest rate margin decreased by six basis points to 2.25%. “This shows an intense level of competition among our banks,” says Hope.

Banks’ net profit for the quarter was up compared to the March quarter, which recorded lower returns due to movement in the fair value of their investments and derivatives.

“Profits are part of the story, and so is the huge direct economic contribution banks make. Last year banks contributed around $6 billion to our economy through the $4.5 billion they invest in running their businesses here, and the $1.3 billion they paid in tax,” says Hope.

The banking industry’s lobby group has slammed the investment regulator over its guidance on how KiwiSaver should be sold, saying it will be harder for consumers to get information on the retirement savings scheme.

By rewriting the law, the Financial Markets Authority (FMA) is doing consumers a disservice says the New Zealand Bankers’ Association.

Following the release of the FMA’s guidance note on the sale and distribution of KiwiSaver, Bankers’ Association chief executive Kirk Hope expressed serious concerns.

“This is bad for consumers because it limits access to information about KiwiSaver products. By limiting who can provide information about KiwiSaver, they make it harder for consumers to make informed decisions. It could also force people to bear the cost of using specialist advisers.”

“The FMA has attempted to rewrite the legal test for what constitutes advice making it much more difficult to provide only information about KiwiSaver products. Guidance should not be used to extend the law. If the law is wrong, change the law,” said Hope.

The Financial Advisers Act 2008 regulates the provision of financial advice. Section 10(3) of the Act 2008 sets out what does not constitute “financial advice”. These exclusions include the provision of information about a product. Paragraphs 32-33 of the guidance note purport to override this, and suggest that in some circumstances providing information can be advice.

“They’ve made incorrect assumptions about the law, and Parliament’s intentions, and have ignored all submissions on this point. Their insistence that the Act includes a concept of implied advice is not correct. And they haven’t explained how they came to this view.

A survey by Consumer NZ shows the banking sector in New Zealand rates well above other service sectors. New Zealand Bankers’ Association chief executive Kirk Hope says banks have lifted their game over the last five years, with an eight percent increase in customer satisfaction from 84 percent to 92 percent.

Reserve Bank of New Zealand

A recent survey has revealed that most people rate their bank highly, and that the banking sector in New Zealand rates well above other service sectors.

“Banks put a huge effort into customer service and it’s great to see this reflected in the survey results,” says New Zealand Bankers’ Association chief executive Kirk Hope.

The survey of 13,000 people conducted by Consumer NZ in August found that banks outshone other industries with an overall satisfaction rating of 92 per cent. By comparison, similar surveys found satisfaction for electricity companies was 78 per cent (June 2012), with 72 per cent for internet service providers (December 2011) and 55 per cent for appliance retailers (May 2012).

“Banks have lifted their game. Over the last five years we’ve seen an eight per cent increase in customer satisfaction.” A similar survey in 2007 found an overall bank satisfaction rating of 84 per cent.

“The high level of satisfaction with our banks shows how competitive the sector is. By providing excellent service, banks work hard to attract and keep their customers. This is good news for New Zealand households and businesses,” says Hope.

Environment Canterbury