The Reserve Bank of New Zealand and the Financial Markets Authority has briefed the Finance and Expenditure Select Committee on the Australian Royal Commission (RC) into Misconduct in Banking, Superannuation and Financial Services Industry, and the response by regulators in New Zealand.

They have been monitoring the commission since it was initiated and have discussed issues with the Australian regulator.

They said they were concerned the inquiry could have an impact on New Zealanders' confidence in their financial institutions and the potential for complacency in the New Zealand industry.

The two regulators wrote to banks on May 3, initiating a "review of conduct and culture". A request for the same information from life insurers followed on May 23.

"In our monitoring work to date we have not seen evidence of widespread, systemic issues to warrant a commission of inquiry in New Zealand. However, the work we have initiated may test this view," the regulators said.

Eleven banks have so far responded and a joint working group is going through their responses.

The regulators said the submissions were extensive and seemed relevant, for the most part.

There was some variation in what work bans had done into conduct risk and what was expected to be done in future.

"Some responses indicate a proactive approach to conduct risk, while other banks have not yet begun to fully embed conduct risk, governance or oversight into their operations. We will be following up with all the banks on these aspects," the FMA and RBNZ said.

"Following the initial assessment, we will be requesting further information and verification where necessary.  A high bar will be set in meeting our expectations and demonstrating a sufficient level of assurance in regard to good conduct and culture.

"Currently we consider it is appropriate to prioritise our work on banks and life insurers, we haven’t made any decision as to whether to expand that focus in the future."