Non banks and finance companies say banks should not get special treatment

The comments follow a CCCFA programme outlined to about 500 business professionals at the annual conference of Financial Advice NZ. in Christchurch.

During a speech, the party leader Christopher Luxon called the CCCFA “dumb” and “badly drafted”, and said it could be fixed in two stages.

First, the main banks could be excluded from the CCCFA as an interim measure to provide urgent relief for the hard-pressed home lending business.

While that was done, substantive work would get underway to craft a new and better law as a final replacement for the CCCFA. .

Luxon said the plan would not undermine consumer protection in the lending business because the main banks were already well regulated.

The change would happen if the party won the next election, but in the meantime a private members bill was making the same point. .

Luxon said this proposal would not apply to non-bank lenders, nor to mortgage advisers.

The Financial Services Federation (FSF) represents finance companies of which about 60 are non-bank lenders.

Lyn McMorran is the executive director of the federation and says she is concerned that Luxon is proposing to ease the impact of the CCCFA on one group of people and not on the others.

“FSF members represent 1.7 million customers who deserve to be treated as well as the customers of the main banks, she said.

“The leader of the opposition is suggesting that one group of New Zealanders should get a competitive advantage over another

“That's just not reasonable and his argument that the banks are heavily supervised and heavily regulated doesn’t wash because the non-banks are also heavily regulated and heavily supervised.”

McMorran argued the proposed changes would make it harder for her members to do business.

“The banks would have an easier ride, because people would be incentivised to go to banks where it would be easier to get credit.

“It would mean that borrowers did not have the choice that they currently have.”

McMorran’s argument was that the CCCFA was supposedly passed to guard against predatory lending, but ended up catching responsible lenders in the same net.

But if Luxon was proposing to excuse some of those responsible lenders from an onerous law, he should do the same for the others.

Comments from our readers

On 8 September 2022 at 9:37 am Andy the adviser said:

From my experience, the predatory lenders ARE the smaller institutions, finance companies and retail finance companies (BNPL, GEM, QCard etc) who seem to have no problem giving out unchecked finance to people who clearly cannot afford it.

On 8 September 2022 at 2:35 pm Amused said:

Non-bank lenders (home loans) offer borrowers multiple benefits such as less prohibitive criteria, expedited loan application process and a willingness to take higher risks. They perform a valuable role to those customers who don’t quite fit the comfort level of the main banks.

Having said that scores of home loan customers have had to be placed with non-bank lenders because of the CCCFA changes applied across the industry last year. The lender stats provided by aggregator groups clearly show that non-bank lenders have done very well from the CCCFA changes.

If the main banks are ultimately going to be exempt from the CCCFA changes under a National led Government, then this is a positive development as it will allow those customers affected to transition back to a main bank lender where they would have been placed originally had the changes not been introduced in the first place.

The CCCFA changes which the Government insisted would help protect vulnerable borrowers have forced many now into going with the more expensive non-bank lender option. As Luxton said “dumb” and “badly drafted”.

On 8 September 2022 at 3:44 pm Dirty Harry said:

Non banks and finance companies say banks should not get special treatment

of course they do.
Yawn.

On 9 September 2022 at 6:03 am Good Hamish said:

Reality starts to set in, mortgage advisers have become a for mat for bureaucrats even after the piles of regulation thrown at us. At some point we might have to realize that the hundreds of thousands of clients that love us can also vote

Non banks and finance companies say banks should not get special treatment

Non-bank lenders and finance companies say they object to being left out of National Party plans to reform the Credit Contracts and Consumer Finance Act (CCCFA).

Wednesday, September 7th 2022, 4:29PM 4 Comments

Comments from our readers

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