Government simplifies lending rules
Loan Market loanmarket . co . nz
The government has revealed that it is working on reforms to the financial services industry designed to make it easier for consumers to access finance .
Commerce and Consumer Affairs Minister Andrew Bayly said that “ after many years of successive changes ”, the financial system had become overly complex and bureaucratic .
“ This has led to a conservative lending environment with an 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 ,” he said .
As a result , Minister Bayly said the Government ’ s reform package would :
• Clarify the rules and responsibilities of financial institutions .
• Ensure that good licensing and enforcement tools are in place so firms adhere to the rules .
• Improve transparency for financial dispute resolution services so consumers can get help more quickly when things go wrong .
“ Financial services are foundational for economic success and are woven throughout our lives . Without access to finance , our economy will grind 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 to what safeguards are in place if trouble strikes ,” he said .
Minister Bayly said the reform package would also :
• Remove the personal liability for directors and senior managers of financial institutions and shift it back onto businesses .
• Reduce the number of incidences in which lenders were punished despite a lack of financial harm .
“ 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 ,” he said .
FMA TO BE GIVEN STRONGER OVERSIGHT
The government previously announced that consumer lending regulation would be transferred from the Commerce Commission to the Financial Markets Authority ( FMA ). Minister Bayly said this new announcement took that process further by ensuring the FMA would be 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 ,” he said .
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