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Banks want tweaks, not repeal, to CCCFA and CoFi

Banks are optimistic the new National Party-led government will be more business-friendly than the previous government but they would prefer the government to tinker with regulation rather than engage in wholesale repeal.

Wednesday, March 13th 2024, 6:11AM

by Jenny Ruth

Accounting firm KPMG's latest survey of 27 banks reporting between Oc t 1, 2022 and Sept 30, 2023 found that they are uncertain about what the government will do to the Credit Contracts and Consumer Finance Act (CCCFA) and the Conduct of Financial Markets (Conduct of Institutions) Amendment Act (CoFi).

“The main concern is that most banks have either implemented or are well down the path to implementing the required processes and there will be potential costs involved if the existing legislation were to be scrapped,” KPMG said.

“The banking sector's preference was for the government to focus on improving efficiency and removing bureaucratic hurdles within existing legislation to provide a more conducive environment for banking operations while retaining aspects of the current legislation,” it said.

“All of the survey participants acknowledged that the concept of the current legislation was appropriate. Additionally, the banks have emphasised the importance of improving efficiency by providing more guidance and reducing red tape to get businesses moving.”

All the participants agreed about the “crucial need” to protect vulnerable borrowers, but “there was a shared sentiment that the CCCFA has missed these foundational objectives.”

Areas the legislation could be improved included reducing the severity of penalties, providing a “safe harbour” in which institutions could self-report and rectify issues without incurring any further penalty.

Participants also complained about a lack of guidance about “some interpretations.”

Because of the CCCFA's shortcomings, the legislation is believed to be directly contradicting its aim of increasing financial participation.

The survey respondents also complained about the “mixed messages” coming from the government on CoFi.

“This lack of clear direction was something survey participants hoped would be clarified quickly.”

The rising regulatory costs are “a prime hurdle” and institutions were finding a disproportionate impact of the new climate reporting requirements.

The lack of certainty about exactly what is required and whether the disclosures will match or satisfy the regulators is something the sector would like clarified.

“Another matter raised was the volume of this new reporting and whether it was really intended that it run to 50-plus pages.”

The survey found banks' profitability rose just 0.28% in the survey period to $7.21 billion with a 16.9% jump in net interest income offset by a 33% fall in non-interest income, an 8.9% rise in operating costs and a more than three-fold increase in impaired assets expense.

Tags: CoFI

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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