So do you trust your banks?

With Australia staging a Royal Commission into the behaviour of their banks and insurance companies and a raft of dodgy practices being unearthed, attention has turned to the New Zealand market.

With 4 of our major banks Australian owned and a number of our insurance companies having strong links across the Tasman the suggestion exists that the industry here may not be as squeaky clean as we imagine.

It’s a suspicion I share.  I have done talkback on it and interviewed financial experts.  While most think that there is a Chinese wall between the trans Tasman operations, I’m still not convinced.

For instance one CEO of a New Zealand operation has recently been transferred from Australia so why wouldn’t she bring operating practice with her.

Sam Stubbs is the Managing Director of Simplicity a low cost Kiwisaver fund manager. Sam was most recently the CEO Of Tower Investments, a KiwiSaver default provider. Before that he was Managing Director of Hanover Group, and spent 10 years working for Goldman Sachs in London and Hong Kong.

Sam has just come out with a list of 24 questions that he thinks the finance industry has to answer.

He says  the two biggest areas of concern for him were the pressure on bank staff to meet sales targets and whether that meant people were being sold inappropriate products and life insurance commissions which can be as high as 230 per cent of the first year's premium. Australia has taken steps to reduce commission levels but we haven’t.

Even just a cursory glance at his questions raises questions I’ve been asking myself for a while.

Are sales staff of financial institutions incentivised to do the right thing, or to sell more products?

Are sales staff being paid a commission to sell their own products while representing themselves as 'advisers'?

With so few NZ adults insured, how can the industry deliver such high profits and shareholder returns?

Why are the average Kiwisaver fees so high on a global level and do these high fees mean better performance?

I’ve posted Sam’s 24 questions on my Facebook page.  Go and have a read and see how many circumstances you’ve experienced.

It strengthens my opinion that a commission of inquiry would be a good thing.  Our Australian owned finance companies are tainted by association with their parent companies and the Australian inquiry.

I don’t have confidence that the finance industry is operating in the client’s best interests rather than their own.

We’ve had a history of finance company failure so the mindset amongst the industry is already ingrained.

To set all our minds at rest and to re-establish confidence I believe an inquiry is necessary.