In May this year a Members’ Bill, the Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill (Bill), was drawn from the Parliamentary ballot. Also referred to as the ‘de-banking’ or ‘woke banking’ Bill, its purpose is to prevent registered banks “debanking” or withdrawing banking services from, or refusing to provide services to, individuals, body corporates or companies for non-commercial reasons. The Bill would amend the Financial Markets (Conduct of Institutions) Amendment Act 2022. The Bill would remove what it terms “murky ‘environmental, social or governance’ moralising” from banking. It would require financial institutions to not treat any consumer less favourably in the provision of financial services, than would otherwise be the case, for any of the following reasons: any of the prohibited grounds of discrimination in section 21 of the Human Rights Act 1993; any direct or indirect environmental, social, or governance consideration; any climate-related reporting standard issued by the External Reporting Board; the industry within which the consumer operates. The Bill does affirm that financial institutions can withdraw or refuse to provide services to consumers or treat them less favourably for a valid and verifiable commercial reason; or as required or permitted by any other enactment. The offence for failing to provide financial services would carry penalties of imprisonment of up to three months or a fine not exceeding $50,000 for individuals, and for a corporate entity a fine not exceeding $500,000. It goes without saying that for businesses to thrive, grow and indeed survive in a competitive or volatile market, having access to credit facilities can be critical. With that considered, one of the questions posed at the Bill’s first reading was, given that a business is engaged in lawful activities, do financial institutions have a duty to continue to provide financial services to these customers, even if they are in a sector a bank no longer approves of. Should financial institutions have the power to withhold such fundamental services, on non-commercial grounds, thereby acting as moral arbiters? On the flip side, the Bill’s explanatory note states that the amendment “extends protection from debanking to industries that environmental, social or governance rules deem to be undesirable”. As such, the sentiment has been expressed that the amendment is less about ensuring that everyday Kiwis have fair access to financial services, as it is about extending protection to those doing business in industries such as fossil fuel and mining. Submissions to the Finance and Expenditure Committee can be viewed on the Parliament website. The Select Committees report is due 21 November 2025.
