Key Facts
- The New Zealand government announced reforms to simplify lending and strengthen customer protections.
- The changes are part of the National-ACT Coalition agreement to update the Credit Contracts and Consumer Finance Act (CCCFA).
- Commerce and Consumer Affairs Minister Andrew Bayly and Housing Minister Chris Bishop announced the removal of “overly prescriptive” affordability regulations.
- The new regulations will still require responsible lending, but without a one-size-fits-all process.
- The dispute resolution scheme will also see changes, with rules of the four official dispute resolution organisations being aligned and the maximum awardable sum increasing to $500,000.
- Exemptions under CCCFA will be granted to local authorities and businesses whose primary service isn’t financial to avoid unnecessary compliance costs.
- The responsibility for overseeing CCCFA is to be transferred from the Commerce Commission to the Financial Markets Authority.
- Phase two of the reform will include streamlining legislation, reviewing the CCCFA, improving dispute resolution systems, and making amendments to support the CCCFA transition.
Article Summary
The New Zealand government, under the aegis of Commerce and Consumer Affairs Minister Andrew Bayly and Housing Minister Chris Bishop, announced reforms to financial services to make obtaining home loans and other lending easier and secure stronger customer protections. The move is part of the coalition agreement between the National and ACT parties to update the Credit Contracts and Consumer Finance Act (CCCFA).
Minister Bayly noted that the reforms would revoke 11 pages of redundant affordability regulations that he described as creating excessive barriers to lending and increased processing time for loans. These changes aim to empower New Zealand residents to access finance with greater ease and confidence, while still ensuring responsible lending practices.
In addition, the government plans to modify the dispute resolution scheme by unifying the rules of the four approved financial dispute resolution schemes and increasing the maximum amount that can be awarded to $500,000. Furthermore, exemptions under the CCCFA will soon be granted to local authorities and non-financial businesses, such as car dealers, and the responsibility for overseeing the CCCFA will be transferred from the Commerce Commission to the Financial Markets Authority.
Phase two of the reform initiative will include the streamlining of three core pieces of legislation, the reviewing of the CCCFA, the betterment of the financial dispute resolution system, and the amendment of stipulations to support the responsibility transition of the CCCFA.
