A sample review of 29 New Zealand-regulated entities including insurers has found a number of good governance practices as well as some that were below expectations. 

The review is the first joint thematic examination of governance across the country’s financial sector by the Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA). 

A core part of the review was assessing the discipline boards follow in governing their activities, with well documented frameworks, policies, and processes to embed continuous improvement.

“We observed a variety of governance practices across entities, which is why the report shares examples of good practice that others can learn from,” Deputy Governor Christian Hawkesby said. 

“A common theme we identified was the need for boards to set themselves up for success now and into the future. 

“This is the essence of being a good kaitiaki. It’s about being a temporary guardian or caretaker, with responsibility to hand things over to the next generation in a better position and ready for the future.” 

Kaitiaki is a Maori term referring to a person who has been given a responsibility to protect something, especially nature or the environment, according to Cambridge Dictionary. 

Good practices found from the Governance Thematic Review include formal and clear processes for planning and formulating strategy; strong processes for selecting and appointing new directors and the CEO; formal standalone conflict of interest policies; and boards being composed of a majority of independent directors. 

However, a glaring weakness is that many of the practices were not “embedded” into policies and processes, and those that were documented often lacked sufficient detail and clarity. 

“While board practices evolved, changes were often not reflected in the entity’s governance frameworks,” the review says. 

“Formalising practices into processes fosters transparency and accountability, which strengthens governance and sets boards up for future success. 

“The processes themselves also need to be robust and comprehensive, and regularly reviewed to ensure they are fit for purpose as the operating environment changes.” 

Click here for the thematic review.