Nothing to fear

Organisations that fear disputes put their business at greater risk.

New Zealand’s banks increased the long-term risk of unreasonable regulations when they did not quarrel with policy-makers who criticised their ‘culture and conduct’.

A recent review found no cases of criminal behaviour from New Zealand’s banks.  But regulators’ still said they had concerns that “banks’ lack of proactivity in identifying and remediating conduct issues and risks means vulnerabilities remain.”

The Prime Minister warned banks to “lift their game”. Minister Faafoi said banks had to come up with “adequate self-regulating processes”, or the Government will step in. Shane Jones said there was “no clear evidence of villainy” from banks in New Zealand, but “without the right processes for dealing with poor conduct, that possibility remained.”

This criticism was not countered by the banks.

It’s probable that the banks’ strategy was to let the politicians vent, since the report meant nothing tangible that could hurt them. They feared that speaking against the politicians would only escalate the dispute.

That was short-term expedience. It will make the problem worse. The final report was an opportunity to halt the motion that the inquiry started. The silence let the issue continue moving, and to shift from real wrong-doing into ‘bad feelings’. Anti-bank sentiment will fester and grow.

Our advice to organisations is not to accept criticism, especially when it is unspecific. Certainly not on the flimsy excuse of not wanting to antagonise stakeholders or add ‘fuel to the fire’. Sure, you don’t need to buy fights. But the penalty of not facing down the bully now, means they’ll be back for more, with a bigger cheering mob.