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Although the Finance and Expenditure Select Committee (the Committee) is not recommending that the Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill proceed, it has not buried the issue either. It is clear that access to banking services remains an area of concern and the Committee will continue to apply scrutiny to this issue.
The Bill’s aims and intent
The private member’s Bill, sponsored by Andy Foster, and promoted by New Zealand First as preventing “woke banks” from “moralising” by ‘de-banking’ or withdrawing services, would require financial institutions to offer financial services to all “consumers” (both retail and “wholesale consumers”) and would prohibit any consumers to be treated “less favourably” on the basis of:
- the prohibited grounds of discrimination under the Human Rights Act 1993 (which already apply to financial institutions);
- environmental, social, or governance (ESG) considerations;
- climate-related reporting standards issued by the External Reporting Board; or
- the consumer’s industry.
Financial institutions would be permitted to refuse or withdraw services where:
- there is a "valid and verifiable commercial reason"; or
- it is required or permitted by any other enactment.
Chapman Tripp’s previous Brief Counsel on the Bill is available here, and our submission to the Select Committee is available here.
Select Committee process
The Bill was referred to the Finance and Expenditure Select Committee in May 2025. The Committee was originally due to report back on 20 November 2025; however, this deadline was extended several times – it appears to have given the member the opportunity to engage and propose updates to the Bill.
The Committee received almost 1,500 submissions on the Bill, of which 97% were from individuals. Overall, 59% of submitters opposed the Bill with 32% in support. Opposition to the Bill stemmed from ESG – particularly climate change – concerns. Support of the Bill primarily arose out of concerns with challenges to accessing banking services, such as transaction accounts and credit, generally from rural communities and the natural resources sector.
It is clear that, regardless of the Committee’s recommendation, there is a significant interest from the public in this issue, and a material level of concern about access to banking services.
Select Committee findings
The Committee has not made a recommendation on whether the Bill should or should not proceed. Instead, it recommended that the House note its report, which reflects differing views within the Committee.
Overall, the Committee considered that the outcomes the Bill seeks to accomplish could be met by:
- the Committee’s ongoing six-monthly updates from the banking sector, which it considers will be an opportunity to ask about the provision of banking services; and
- the implementation of two recommendations from its Inquiry into Banking Competition:
- Recommendation 9: Make climate lending rules clear and consistent. We recommend the Reserve Bank develop transparent national guidelines for banks on the application of climate-related risk weighting and pricing, regarding how it influences subsequent lending practices across different sectors.
- Recommendation 15: Formal disclosure of factors. We recommend agricultural lenders formally disclose to customers the specific factors they take into account when calculating their risk margin and pricing.
The Labour Party opposed the Bill.
New Zealand First’s position was that although submitters held differing views on the Bill as originally drafted, there was considerable agreement on two issues:
- the right to obtain a transaction account; and
- the right to transparency about why financial services were declined.
New Zealand First criticised the Committee for failing to address Andy Foster's revision of the Bill to narrow its scope and provide that:
- a registered bank must:
- provide banking transaction services on terms and conditions that it deems appropriate; and
- not treat any client less favourably in the provision of transactional bank account products and services than would otherwise be the case due to the nature of the client where that is not able to be explained in terms of financial terms and risk to the bank; and
- where registered banks and insurers decline credit or insurance services, they must provide “full financial and risk reasons for those services being declined” on request within 10 working days.
Where does this leave us?
Although the Committee has not recommended that the Bill proceeds, the issue of de-banking and access to banking (and insurance) services remains live. It is clear that the Committee will continue to consider this issue as part of its ongoing scrutiny of registered banks and regulators.
However, the law remains the framework against which this broader discussion and scrutiny will take place. Below we set out a brief snapshot of the legal framework for banks terminating their customer relationships.
Contractual freedom at common law
The established common law position, dating back to the late 1800s, provides that unless there is a contractual or statutory restriction, a contract by a bank to provide banking services to a customer is terminable by the bank upon reasonable notice.
In The Christian Church Community Trust v Bank of New Zealand [2024] NZCA 645 (Gloriavale), the Court of Appeal confirmed the orthodox position continues to apply in New Zealand.
In Gloriavale, the contract provided that BNZ could terminate its banking relationship with a customer “for any reason” on 14 days’ notice. Significantly, while the Court did not take the opportunity to conclusively determine how the common law will treat contractual discretions, it declined to read any further restrictions (whether substantive or procedural) into that contractual term. The Court referred to “the arms-length nature of the banker-customer relationship, and the many respects in which the parties have preserved, rather than limited, their unilateral freedom of action”.1
The Court of Appeal also confirmed that:
- There is no obligation on banks to provide minimal banking facilities as an essential service for customers without alternative banking options, saying:2 “there is no such requirement in New Zealand legislation, and we do not consider that it is arguable that such a requirement could be imposed by the courts as a matter of common law”.
- A bank’s legitimate interests extend beyond a customer’s compliance with contractual terms. It is not arbitrary, capricious, or irrational for a bank to terminate a relationship for reasons beyond non-compliance with standard terms or immediate financial risk, with the Court observing:3
“it would not be arbitrary or capricious or irrational for a bank to adopt an environmental responsibility policy, and to decide not to provide banking facilities for a major polluter pursuant to that policy, however regular the conduct of that entity’s accounts and however good that banking relationship may have been.”
Recently, the Courts in Australia and the United Kingdom have similarly declined to read in additional restrictions on banks’ ability to terminate customer relationships beyond the terms of the contract.4
Restrictions created by the statutory framework
A number of statutes on the books already impact financial institutions’ interactions with their customers, including:
- The Human Rights Act 1993 prohibits banks and financial institutions from
- refusing or failing on demand to provide any person with goods, facilities, or services; or
- treating any person less favourably in connection with the provision of goods, facilities, or services than would otherwise be the case, based on sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origins, disability, age, political opinion, employment status, family status, or sexual orientation.5
- The Conduct of Financial Institutions (CoFI) regime under the Financial Markets Conduct Act 2013 requires banks and financial institutions to comply with the fair conduct principle and their own fair conduct programme. For example, this could require banks to consider vulnerable customers in accordance with their vulnerable customer policy.
- The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 which – amongst other things – obliges reporting entity financial institutions to conduct customer due diligence, and to terminate business relationships with customers if those requirements are not met.6
- The Russia Sanctions Act 2022 which includes prohibitions on financial institutions as New Zealand persons from dealing with services or assets of, or for the benefit of, sanctioned persons.7
- The Health and Safety at Work Act 2015 which includes a primary duty of care on financial institutions as persons conducting a business or undertaking to ensure the health and safety of its workers, as far as is reasonably practicable.8 The Banking Ombudsman has recognised that abuse by customers can provide reasonable grounds to close accounts to protect the physical and mental health of workers.9
Our thanks to Maisy Bentley and Megan Ritchie for their assistance with this article.
1- At [100].
2- At [150].
3- At [139].
4- Merciful Group Incorporated v Norfina Limited t/as Suncorp Bank [2025] NSWSC 841; Al Yasin v Starling Bank Limited [2025] EWHC 3582 (KB).
5- Human Rights Act 1993, ss 21 and 44.
6- Anti-Money Laundering and Countering Financing of Terrorism Act 2009, s 37(1).
7- Russia Sanctions Act 2022, s 18.
8- Health and Safety at Work Act 2015, s 36.
9- Case note 37116.
