- Hon Andrew Bayly
5 September 2024 The Government is progressing further reforms to financial services to make it easier for Kiwis to access finance when they need it, Commerce and Consumer Affairs Minister Andrew Bayly says. "Financial services are foundational for economic success and are woven throughout our lives. Without access to finance our economy grinds to a halt. "The regulation of financial services is therefore vital for a well-functioning economy. Kiwis may not realise it, but financial regulation affects everything from how quickly and easily you can get a loan through to what safeguards are in place if trouble strikes. "Unfortunately, after many years of successive changes, the financial landscape in New Zealand has become overly complex, with layers of legislation creating a lack of clarity. "This has led to a conservative lending environment with overlap in the roles of various institutions, unnecessary compliance burden for businesses, and excessively prescriptive lending rules which have locked consumers out of the market. "To address this, we are progressing a package of reforms to clarify the rules and responsibilities of financial institutions, make sure there are good licensing and enforcement tools in place so firms adhere to the rules, and, finally, improve transparency for financial dispute resolution services so that Kiwis can get help more easily when things go wrong. "As part of these reforms, the intention is to remove the personal liability for directors and senior managers of financial institutions and shift it back onto businesses. I am also proposing changes that will reduce the number of incidences where lenders are punished despite a lack of financial harm. "This doesn't remove the requirement to be a responsible lender. There will still be repercussions for lenders who make mistakes or issue bad loans, but the changes will move towards a more proportionate, risk-based approach. We want to focus enforcement efforts on instances where there has been genuine financial harm. "We have already announced that consumer lending regulation will transfer from the Commerce Commission to the Financial Markets Authority (FMA), but today's announcement goes further and will ensure the FMA is fully equipped to be the leading financial conduct regulator. "Lenders will transition to a licensing model, at no cost, to bring consumer lending in line with other entities regulated by the FMA. The FMA will be given a stronger role in protecting consumer interests when any financial firm licensed with the FMA changes owners and a new onsite inspection power to help them proactively monitor market conduct. "These changes are significant shift in consumer credit regulation, away from the prescriptive and restricting landscape of old, and towards a more common-sense approach." Media contact: Grace Ridley-Smith, +64 21 804 628 More information about the financial services reforms is available on the MBIE website. |
