Everett fires back at Drylie

• Tweet

The former head of the Financial Markets Authority (FMA) says he has little sympathy for complaints that banks are being strangled in red tape.

Friday, November 5th 2021, 1:47PM 1 Comment

In fact, he has had to "shake the banks and insurers by the lapels" to make sure they did not innovate at the expense of existing clients tied to traditional financial products. 

The original complaints about over-regulation came from the retiring chief executive of SBS Bank, Shaun Drylie, and attracted a lot of sympathetic comment when they were published by TMM.

Drylie was speaking as a five year career as head of SBS was coming to a close. 

He said many reforms to the financial sector had been positive, but not all. 

“My key message is that a lot of the regulations …. to protect the customers are putting a huge amount of internal pressure on banks.

“It means a lot of the focus of the banks is not on innovation but on regulation and compliance.”

Drylie said the challenge was to lighten the regulatory burden so that banks could spend more time developing their business rather than working hard on a heavy compliance regime.

But Rob Everett laughed off that view, saying he did not have a lot of sympathy for it.

“We totally get that the overall burden of regulation is intense for the industry and probably needs some degree of phasing so it doesn't come all at once. 

“But where I have less sympathy is that the type of innovation that we have seen is how can (companies) devise more products that they can can sell to more people for more money,” he said.

“But everything that we have seen before that date tends just to get pushed off into a corner and left to operate.”

Everett was basically arguing that banks tend to focus on the new and not bother too much about the old.  That process just would not work. 

“The methods by which (financial) products are sold needs constant attention in banking.” 

Everett left the FMA after seven years as CEO.  In an exit interview, he told TMM that the FMA found there was not nearly enough attention being given by banks to the work they traditionally do.

“By all means be innovative, we want that, that's great, but "set and forget" for the products you have already got … that is a real problem for financial services.

“We are shaking the banks and insurers by the lapels to say, before you come up with the next sexy thing, have you looked at what you sold 15 years ago and are you sure that is still performing for the client. 

“And if it isn't, can that be fixed, should it be fixed or is that just commercial reality?”

Tags: compliance FMA SBS Shaun Drylie

Comments from our readers

Sign In to add your comment