Extending the term of the Addendum to the Responsible Lending Code: COVID-19

Background

Since March 2020, lenders have been dealing with borrowers who have been experiencing financial stress as a result of COVID‐19. Many borrowers have been seeking variations to consumer credit contracts (e.g. mortgages and personal loans) to provide them with relief. Common means of relief include reducing current repayments by extending loan terms, changing the type of repayments (e.g. interest only payments), or temporarily deferring repayments.

Earlier this year, the Minister of Commerce and Consumer Affairs approved the Addendum to the Responsible Lending Code to provide guidance on how lender responsibility principles may be implemented by lenders while dealing with borrowers who have been impacted by COVID-19. 

The Addendum is due to expire on 30 November 2020. Significant uncertainty persists across a number of sectors. As wage subsidies end over coming months, a proportion of the customers who currently have loan deferrals or repayment reductions are likely to continue to need relief after November 2020, and further cohorts of borrowers may require assistance.

Question

Should the term of the Addendum to the Responsible Lending Code: COVID-19 be extended beyond 30 November 2020, for example to early 2021? Please give reasons for your view.