The Financial Markets Authority has found the conduct and culture of New Zealand's banks to be 'patchy'.
The FMA and the Reserve Bank are currently reviewing New Zealand banks' behaviour against the backdrop of the inquiry into the Australian banking sector which revealed unethical and illegal behaviour.
The regulators have made spot visits, spoken to frontline retail staff and visited small banks in regions, in addition to the written material it asked the main banks to provide.
FMA chief executive Rob Everett said it's found what it expected.
"The extent and understanding of financial services firms as to what's required and how to achieve it, in terms of how to treat your customers well and how to set yourselves up to do that, I'm going to politely describe it as patchy."
It will report its initial findings from the review in October.
Mr Everett said he was "sceptical" and concerned about the "very low" number of complaints it received, and the lack of avenues for whistleblowers may be a factor.
"That may reflect a cultural willingness to put up with bad stuff without complaining about it."
Mr Everett said the review had increased collaboration between regulators, although they were still working through the various responsibilities.
"There's quite a lot of players in this space and it can sometimes be really hard to work out where [a case] sits," Mr Everett said.
"We have to make sure that with the Commerce Commission and Serious Fraud Office, a whole bunch of agencies, that we don't just let things slip because we've handed it onto someone else."
The FMA has released its annual corporate plan, detailing what its work priorities will be for the coming year.
It said it planned to investigate more market abuse, non-disclosure, anti-money laundering conduct and scams.
Mr Everett said the FMA would become more "muscular" and exercise other enforcement powers it has rather than prosecution, because court proceedings were timely and resource-heavy.