Financial Reforms To Shift Responsibility To Firms, Ease Lending For Kiwis
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- Government aims to streamline financial services to improve access to finance for Kiwis.
- Reforms will reduce complex regulations and shift responsibility to businesses, not individuals.
- Financial Markets Authority to take a stronger role in overseeing consumer lending practices.
The New Zealand Government is moving forward with further financial reforms to make it easier for Kiwis to access finance when needed. Commerce and Consumer Affairs Minister Andrew Bayly announced the changes, highlighting their importance for both individuals and the broader economy.
“Financial services are foundational for economic success and are woven throughout our lives. Without access to finance our economy grinds to a halt,” he explained. Bayly emphasised that financial regulation plays a crucial role, affecting everything from loan accessibility to safeguards when financial trouble arises.
However, the Minister noted that years of successive changes had led to an overly complex financial system. This complexity has resulted in a conservative lending environment, increased compliance burdens for businesses, and overly strict lending rules that have left some consumers unable to access finance.
To address these challenges, the Government is progressing a package of reforms aimed at simplifying financial rules and clarifying the responsibilities of institutions. Bayly said the reforms would ensure that financial firms adhere to regulations while improving transparency around dispute resolution services. “We want to make it easier for Kiwis to get help when things go wrong.”
One major change will involve removing personal liability from directors and senior managers of financial institutions, shifting responsibility back onto businesses. Bayly also outlined proposed adjustments that would reduce penalties for lenders in cases where no financial harm has occurred.
“This doesn’t remove the requirement to be a responsible lender,” Bayly clarified. “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.”
The reforms also include transferring consumer lending regulation from the Commerce Commission to the Financial Markets Authority (FMA), positioning the FMA as the leading financial conduct regulator. Lenders will transition to a no-cost licensing model to align consumer lending with other entities overseen by the FMA. Additionally, the FMA will gain new powers, such as on-site inspections, to proactively monitor market conduct.
“These changes represent a significant shift in consumer credit regulation, moving towards a more common-sense approach,” Bayly concluded.