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CCCFA and financial adviser reforms not well implemented; Bankers Association

The Bankers Association has given more examples of how difficult it can be to comply with government regulation.

Tuesday, October 12th 2021, 11:26AM 6 Comments

by Eric Frykberg

The issue emerged after some parting comments from the outgoing SBS Bank chief executive Shaun Drylie. 

Drylie said banking staff were often so busy complying with government regulations they had little time left for developing new, innovative banking products or services.

The chief executive of the Bankers Association, Roger Beaumont, agreed with this view.  

He said the government would often issue requirements of the banking sector that had to be achieved by a set date. 

But as that date approached, vital information on how to comply was not forthcoming.

It would often arrive late in the process, meaning banks sometimes had to scramble to meet a deadline that could have been dealt with easily.     

Pressed for some examples, Beaumont described changes to the Credit Contracts and Consumer Finance Act 2003.

These were intended to prevent people taking on unaffordable debt, and the association agreed with that aim, which involved cracking down on unscrupulous lenders.

Banks were caught up in this along with cowboy lenders and Beaumont had no problem with this. But it was not handled well. 

“The new regime means banks need to gather and verify more information from loan applicants...the bulk of the new changes were set to come into force on October 1 this year,” Beaumont said.  

“Early on we sought an extension to the implementation date due to the complexity of implementing the new requirements, which involve significant changes to lending policies, processes, IT systems, and staff training.

“The government declined requests for an extension on those grounds.”

It was only the Covid alert level 4 lockdown in August that led to the Government accepting the banks' argument that an extension was needed, and the deadline was pushed out from October 1 to December 1.

But Beaumont argued the need for an extension of time was well established before Covid hit. 

Another example was the new information disclosure requirements for financial advisers, where the deadline for implementation was completely unrealistic.  

Beaumont said the Financial Services Legislation Amendment Act 2019 was a complex piece of legislation and was given just seven months for implementation.  

In the end the banks needed, and were able to get nine more months to do the work, and the scheme came into effect in March this year. 

Beaumont said good regulation worked best with input from industry on the feasibility of implementing any new requirements.  

His organisation often agreed with the aims of regulatory changes, but the implementation time frames were often impractical. 

TMM sought a response to this from the Minister of Finance Grant Robertson. His office referred us to the Minister of Commerce and Consumer Affairs, David Clark, for comment.

In the end, Clark's office came back with a statement that did not really address the matters raised by Drylie and Beaumont.

Instead, it mainly re-iterated the Government's goals of protecting consumers from high cost loans and unaffordable debt.

The statement did say the changes had been implemented after several rounds of consultation with the industry. 

And the statement conceded that lenders would need to make significant changes to their processes in response to these requirements.

However, it said the changes were crucial to reduce the harm caused by irresponsible lending.  

The statement concluded by saying banks had in fact been given an extension of time because of Covid, but did not explain why earlier requests for an extension were denied.

Tags: Bankers Associaton banks SBS

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Comments from our readers

On 12 October 2021 at 12:20 pm JeffQV said:
The new CCCFA rules are trying to fix a problem that does not exist. In NZ we do not have irresponsible lending and never have done. The changes, like so many this government has introduced. will end up hurting those it says it's trying to protect.
On 12 October 2021 at 2:00 pm Amused said:
"TMM sought a response to this from the Minister of Finance Grant Robertson. His office referred us to the Minister of Commerce and Consumer Affairs, David Clark comment."

"In the end, Clark's office came back with a statement that did not really address the matters raised by Drylie and Beaumont."

Yip. Sums up this current lot in charge completely. And if David Clark's office could have referred TMM onto another Minister they would have also. It's becoming obvious to more and more New Zealanders each day now that all of these additional regulations being introduced by this Government are only good for one thing - cementing jobs for back office bureaucrats. Meanwhile at the front line we can't even manage to pay our doctors and nurses now what they are worth. Bloody shameful!

As Jeff notes correctly New Zealand has always had great lending practices at our main banks (well aside from Westpac briefly offering customers 30 years interest only a few years ago) so all these new CCCF Act changes will do now is actually end up hurting borrowers.

Regulation lest we forget is supposed help the consumer. Not hinder them. No wonder that experienced bankers like Shaun Drylie have now spoken up.
On 12 October 2021 at 8:36 pm Veteran Charles said:
Jeff QV - you state it exactly, in a nutshell. That is what I think to myself all the time - and we see it playing out all the time. What you say is the honest truth and it is really sad. With thanks
On 13 October 2021 at 9:46 am w k said:
@jeffqv & veteran charles: you guys are not alone, i saw that too.
nothing new. this is the dna of bureaucrats. that's what they do for a living - creating jobs for themselves.
the h&s people are a bunch of fine examples.
On 13 October 2021 at 11:12 am Amused said:
@ w k - 100 percent in agreement and also loving your H&S people comment!

I'm not sure how some of these bureaucrats can think that they are actually adding value to NZ society.

The changes being made to the CCCF Act are overzealous and will only end up penalising borrowers who need as much assistance as they can get nowadays when purchasing a property.

So much for this Government saying their focus is on helping first home buyers!

On 13 October 2021 at 12:24 pm w k said:
@amused: thank you.
"they are actually adding value to themselves."
none of their first home buyers scheme work, and i bet the shared ownership scheme won't work either. there is a proven system that will work, but they won't look at it - i suspect hidden agendas.
you see, the way bureacrats work is that there must be problems, hence, they created them so that they can thrive. they don't have any idea how to make things better. when things do get better, they got lost.
that's just my thoughts.

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AIA 4.55 ▲2.99 ▲3.45 ▲3.69
ANZ 4.59 3.39 3.85 4.09
ANZ Blueprint to Build 1.68 - - -
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BNZ - TotalMoney 4.70 - - -
CFML Loans 5.15 - - -
China Construction Bank 4.49 4.70 4.80 4.95
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First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
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HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
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ICBC 3.69 2.45 2.85 3.15
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank ▲4.00 3.80 ▲4.15 ▲4.50
Kiwibank - Offset ▲4.00 - - -
Kiwibank Special 3.75 2.95 ▲3.30 ▲3.65
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
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Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 3.05 3.45 3.75
SBS Bank Special - 2.55 2.95 3.25
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.65 - -
The Co-operative Bank - Owner Occ ▲4.55 2.79 3.25 3.49
The Co-operative Bank - Standard ▲4.55 3.59 4.05 4.29
TSB Bank 5.34 ▲3.54 ▲4.00 ▲4.24
TSB Special 4.54 ▲2.74 ▲3.20 ▲3.44
Wairarapa Building Society 4.99 3.55 3.49 -
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Westpac 4.84 ▲3.59 ▲4.05 ▲4.29
Westpac - Offset 4.84 - - -
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Median 4.57 2.99 3.45 3.65

Last updated: 18 October 2021 9:15am

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