Government announces package of financial services reforms

Together, these reforms aim to provide regulatory clarity, protect vulnerable consumers and grow the economy.

As part of the phase 1 changes, Government has agreed to remove prescriptive affordability assessment requirements under the Credit Contracts and Consumer Finance Act (CCCFA). Lenders will have greater flexibility in how they determine whether lending is affordable and will still be required to take steps to ensure lending does not cause hardship.

Other phase 1 changes include:

• The rules for the four approved financial dispute resolution schemes are being aligned. The regulations providing for Dispute Resolution Scheme rules changes will be in place by 18 July.
• Local authorities will be exempted from the CCCFA to allow them to administer voluntary targeted rates schemes – such as loans to install insulation or heat pumps – without incurring unnecessary compliance costs. This exemption will take effect by 25 April.
• Entities whose primary business is non-financial goods and services, such as certain car dealers, will be fully exempted from duplicative reporting requirements under the CCCFA by 25 April.
• The Responsible Lending Code will be updated to clarify for lenders how they are expected to ensure lending is affordable once the affordability regulations have been revoked.
• Redundant Covid-19 exemptions from the CCCFA will also be removed.

Changes to come as part of phase 2 of the reforms include:

• Reviewing the CCCFA to address areas of under-performance, including the liability settings and disclosure obligations.
• Reviewing the CCCFA’s high-cost credit provisions to ensure there is adequate regulation surrounding these lending practices.
• Improving the effectiveness of the financial dispute resolution system.
• Making amendments to support transferring responsibility for the CCCFA from the Commerce Commission to the FMA.
• Clarifying the requirements of the CoFI regime and reviewing the conduct licensing framework in the Financial Markets Conduct Act to ensure there is balance and flexibility.

MBIE will publicly consult on revisions to the Responsible Lending Code, and possible amendments to the CCCFA, including changes to the high-cost credit provisions, Conduct of Financial Institutions (CoFI) and conduct licencing, and financial dispute resolution in the coming months.

Read the Beehive press release:

Supporting better financial outcomes for Kiwis(external link) — Beehive.govt.nz

Read more about the reforms on the MBIE website:

2024 financial services reforms