Source: New Zealand Government
The Government is moving to improve access to credit for New Zealanders through changes to the Credit Contracts and Consumer Finance Amendment Bill, which was reported back from the Select Committee today.
These reforms will restore common sense to lending, reduce unnecessary red tape, and ensure responsible borrowers can access finance when they need it, Minister of Commerce and Consumer Affairs Scott Simpson says.
“I would like to thank the Select Committee for the work they have done on this Bill, and all those who took the time to make submissions,” Mr Simpson says.
“I said from the outset that I wanted these proposals to be tested through the Select Committee process, and I’m pleased that has now been completed.
“As a result of the feedback received, the Committee has recommended a number of changes, which the Government parties will accept. This includes adjustments to the retrospective element of the legislation.
“While retrospective law change is unusual, in this case I believe it is justified. The intent has always been to fix bad law and ensure the courts have the discretion to reach fair and equitable outcomes.
“Through the Select Committee process, it was suggested that ongoing court cases be exempt from these provisions. The Committee considered this carefully and recommended that approach, and the Government parties agree.
“There has been significant attention on the retrospective element of the Bill, which has at times overshadowed the broader purpose of these reforms. Ultimately, this legislation is about improving access to credit and reducing unnecessary red tape for both lenders and consumers.”
Mr Simpson says the reforms will make it simpler for New Zealanders to access credit when they need it, whether for buying a home, growing a business, or managing family finances.
“Previous changes saw banks and other lenders weighed down by excessive compliance requirements. That led to an overly cautious approach to lending, making it harder for Kiwis to access affordable credit when they needed it most.
“Many will remember the frustration of being asked intrusive questions about everyday expenses such as takeaways or streaming subscriptions when applying for a home loan. That is why the Government acted to remove unnecessary rules, bring back common sense, and make it easier for responsible borrowers to access finance.”
The Bill also simplifies the regulatory framework to reduce compliance costs for businesses.
“Currently, many firms face oversight from three separate regulators: the Financial Markets Authority, the Commerce Commission, and the Reserve Bank. This can be unnecessarily complex and confusing, and these changes will streamline that system.
“Another important change removes personal liability for directors and senior managers over minor administrative mistakes. That provision was discouraging capable people from taking up governance roles and added to the regulatory burden faced by lenders.
“These reforms are part of the Government’s wider financial services reform package, which is focused on creating a more dynamic, fair, and accessible financial system for all New Zealanders.”
Notes to editors:
The Credit Contracts and Consumer Finance Amendment Bill is being progressed as part of the Government’s financial services reforms.
This also includes the Financial Markets Conduct Amendment Bill and the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill.
Together, these Bills form part of a comprehensive overhaul that will rebalance the system to ensure consumer protection without stifling access to credit or innovation.
This delivers on a National-ACT coalition agreement to rewrite the Credit Contracts and Consumer Finance Act 2003 to protect vulnerable consumers without unnecessarily limiting access to credit.