Earlier in the week I wrote about the New Zealand Initiative’s report on economic regulators, and in particular the scathing feedback (in survey results and interviews) for the Reserve Bank’s handling of its extensive financial regulatory and supervisory function.

I noted then

One would hope that the new Governor, the new Minister, and the Treasury and the Board, are taking these results very seriously, and using them to, inter alia inform the shaping of Stage 2 of the review of the Reserve Bank Act.  I’ve not heard any journalist report that they’ve approached the Reserve Bank  –  or the Board or the Minister – for comment on the report and the Bank-specific results.   But such questions need to be asked, and if the Bank simply refuses to respond or engage that in itself would be (sadly) telling.

But a reader drew to my attention that Hamish Rutherford of Stuff has indeed approached the Bank.  And got answers.

Adrian Orr, the new governor of the Reserve Bank, has written to the chief executives and chairs of New Zealand’s banks alerting them to a damning report fed by their anonymised comments.

An improbable star of New Zealand finance, Orr, 55, started in the role on March 27, arriving at a central bank which he acknowledges is under fire.

“This place is a diamond, but it needs significant polishing in places,” Orr said in an interview in the Reserve Bank headquarters.

“We need to think much harder about how we behave, how we roll, how we explain, how we do things. That’s a cultural challenge for the bank.”

and

As well as posting the comments of the report on the Reserve Bank’s internal intranet, Orr had written to bank bosses with the message that: “Hey, this doesn’t print well. We hear you. We need to do something about it.”

He expected that writing the letter and making public statements would elicit “free, unsolicited advice about how this place can do better”.

That is an excellent start: fronting and recognising the issue, to the public, to staff, and to the heads of regulated entities (people who completed the survey).

I’ve been critical enough of the Bank –  and have offered plenty of unsolicited advice as to how the place can be improved (by law and by culture/performance).  I’ve also been a little sceptical of Orr, prior to him taking up the role.   But this is an excellent start.  It is only a start of course, and perhaps he really had no choice but to adopt such an approach in response to feedback so dire.  And actions will need to follow, to change future outcomes. and that will take time and lot of commitment.   But I’m not going to grudge him praise today.

Well done, Governor.