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A review into governance practices at the country's financial institutions has found there is room for improvement across most entities.
The joint Reserve Bank and Financial Markets Authority (FMA) review sampled 29 entities regulated by the two - from banking, insurance, non-bank deposit-taking and investment management sectors.
It found a number of good practices, such as boards having majority of independent directors, clear succession planning for chief executives and senior managers, and strong processes for appointing new directors and the chief executive.
But the review also found some key areas for improvement, including the process for selecting and appointing the board chairperson and committee members, which it found was not robust.
Among other findings, the review found succession planning for boards was not as formal and rigorous as expected, and diversity policies did not apply to board level.
The Reserve Bank's director of financial stability assessment and strategy Kerry Watt said entities needed to have better governance frameworks and succession planning for boards.
He said internal board evaluations were also found to be inadequate, highlighting the need for more independent reviews.
"We regard independent evaluations as critical because they provide an independent review of how boards are going. We think it's important that boards at least consider having those independent reviews."
Reserve Bank deputy governor Christian Hawkesby said good governance was critical to the success of financial institutions.
"We therefore all rely on boards to provide effective direction, oversight and governance.
"We observed a variety of governance practices across entities, which is why the report shares examples of good practice that others can learn from."
