The Finance and Expenditure Committee has released its report on the Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill (Bill), colloquially known as the "woke banking bill". The Select Committee has recommended only that the House take note of the report and has stopped short of endorsing the Bill's passage into law.
Since its introduction to Parliament the Bill has been the subject of much scrutiny, reflected in the 1,445 submissions received by the Select Committee, 97% from individuals and with 59% of submitters opposed to the Bill.
If passed in its original form the Bill would have amended the Financial Markets (Conduct of Institutions) Amendment Act 2022 to prevent financial institutions from refusing or withdrawing services based on ESG factors, climate reporting standards, industry type, or grounds listed in the Human Rights Act 1993. Subsequent changes to refocus the text of the Bill on transactional banking and insurance were not considered in detail by the Select Committee, although official advice noted a number of technical issues with the proposed redrafted legislation.
Rather than endorse the Bill, the Select Committee considered that recommendations from the inquiry into banking competition, and the Select Committee's ongoing scrutiny, would achieve the outcomes the Bill seeks to accomplish. New Zealand First noted that the member in charge had revised the Bill to narrow its scope to transaction account access and disclosure obligations, however the Select Committee and member were ultimately unable to find a workable way to update the Bill.
Our thoughts
This likely marks the end of the road for this Bill. Banks, insurers and other financial institutions may be relieved to avoid further compliance requirements without obvious benefits to their customers or their commercial interests. However, with the increasing importance of ESG factors clashing with financial inclusion and political imperatives, we may not have seen the last attempt at this type of legislation.
If you would like to discuss any aspects of the Bill or related financial services regulatory developments, please get in touch with our financial services team.
This article was prepared by Andrew Suggate (senior associate) and Janet Liu (senior solicitor).
