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Karen Scott-Howman: "One of the things that sets us apart here is our open and transparent relationships with our regulators."

An insurance market expert who has led big-name financial services providers on both sides of the Tasman says an inquiry is needed into behaviour of the banking and financial advice sector in New Zealand.

Australia has been rocked by a series of financial sector scandals in recent years.

A Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry last week heard the Commonwealth Bank (CBA), parent of ASB, had charged dead clients for advice.

Then it revealed, in the same week, that AMP had misled the regulator as many as 20 times over its practice of charging for advice clients never received.

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With our four big banks owned by Australian parents, and AMP a key name in our KiwiSaver space, it prompts the question: Could it happen here?

David Whyte, former managing director of AIG Life in Australia and former general manager of AIA in New Zealand,  said the culture in a multinational organisations tended to be driven by the same metrics, same performance measures and same expectations of shareholder value, in all the countries they operated in.

He suspected New Zealand personnel showed more integrity than their Australian counterparts had.

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Claire Matthews: "They are subsidiaries, they do things differently."

But he said, to prove that beyond doubt and avoid a smear on the industry, there should be an official inquiry.

"For the benefit of the [organisations] themselves there should be a sort of health check carried out."

That would clear them of any lingering suspicion, he said.

There is staff movement between New Zealand and Australian operations.

Vittoria Shortt, the new chief executive of ASB, came to New Zealand from CBA.  Jack Regan, who appeared before the Commission representing AMP's advice arm, was at the helm of its New Zealand business for 10 years.

But banking expert Claire Matthews, of Massey University, said it should not be assumed that the same things were happening in New Zealand simply because the parent companies were the same.

"They are subsidiaries, they do things differently."

Both Reserve Bank Governor Adrian Orr and Commerce Minister Kris Faafoi have agreed with her.

Karen Scott-Howman, chief executive of the New Zealand Bankers' Association, said New Zealand had a different regulatory environment.

New Zealand's biggest banks have Australian parents.

"One of the things that sets us apart here is our open and transparent relationships with our regulators. That tends to help us proactively address issues before they become serious.

"The attitude of our regulators is supported by strong legislation, which includes powers for regulators to demand information from banks about their practices," she said.

"Our customers can be assured no systemic issues have been identified to date and can have confidence in the New Zealand banking system overall. We fully support the ongoing efforts of our regulators to examine our conduct and call us to account."

Whyte said a key problem for the industry in New Zealand was the separation of product sales from true financial advice.

Both product sales and advice had a place in the market but the consumer needed to have a clear idea of what was being offered to consumers each time they interacted with them. Big providers that employed a salesforce needed to "come clean" about which they were doing, he said.

The Financial Markets Authority said it had been watching the Royal Commission closely and talking with New Zealand-based firms about their operations.

 "Our strategic risk outlook and our annual corporate plan set out a number of priority areas and related work programmes which reflect our focus on sales practices and advice. These priority areas have been partly driven by what we have seen in Australia, the UK and other jurisdictions.

 "We are considering whether to accelerate or adapt any of the planned work to reflect issues being raised in the Royal Commission.  We are also in close dialogue with the RBNZ on those matters."

The Financial Services Legislation Amendment Bill is working its way through select committee at present. It levels the playing field for financial advisers - requiring all who give advice to work for a licensed financial advice provider, and to operate under a code of conduct.

It will apply to both the financial advice arms of banks and to independent adviser firms.

Advisers are duty-bound to give priority to client interests and will have to explain how they might have a conflict of interest. Banks will not be able to remunerate staff in a way that jeopardises client interests.

There had been concerns that bank advisers and others working for big providers would have a conflict because they would not be able to recommend products beyond the scope of what their provider offered.

Legal experts said they could get around that by making clear the limitations of their advice - such as explaining to a client that they were only considering the bank's own KiwiSaver funds, for example.

 - Stuff