Government has repealed parts of the Credit Contracts and Consumer Finance Act

The government has repealed some parts of the Credit Contracts and Consumer Finance Act (CCCFA).  Commerce Minister Andrew Bayly said of the affordability regulations introduced to the CCCFA in December 2021

“These regulations created unnecessary compliance costs and are an excessive barrier for lending. And worse, the regulations failed to protect the most vulnerable Kiwis – the very people they were intended to safeguard”

The time to process loans increased substantially, with Minister Bayly saying some lenders had told him small loans that used to take two hours to process took up to eight hours to process under the new regulations.

Additional reforms to the act include:

• Improving dispute resolution to better protect consumers.

• Exempting councils from the CCCFA so they are able to offer low-risk financial products to help households improve their energy efficiency by installing heat pumps and insulation.

• Removing duplicate reporting requirements.

We hope that the relaxation on small loans flows through to banks being able to offer more flexibility to people with what amounts to a timing issue, rather than a lending issue. But we know that lending rules are notoriously difficult to manage. This is one of the reasons why aspects of the wider programme are of more interest.

Minter Ellison puts the changes into context within a program of changes to financial law and regulation which the government has planned.

Of particular interest are the changes in supervisions structures with the responsibility for administering the CCCFA moving from the Commerce Commission to the Financial Markets Authority. Lending is a financial product, and we think the Financial Markets Authority, with conduct supervision responsibilities and, essentially, all the other financial products, is probably a good home for this law from an ongoing regulation perspective.

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Industry-relevant changes as new government is ushered in

With Labour soon to hand over control to a National and ACT led government (perhaps with support from NZ First), the question on everyone’s lips is what does this mean for our sector?

National have previously come out against the proposed Income Insurance Scheme, with Christopher Luxon calling the levies required to fund the scheme a ‘job tax’. One of National’s 100 day action plan pledges is to stop work on the so-called ‘job tax’. This change could be seen as a positive move as last year Risk Info NZ ran a poll with 80% of respondents not supporting the introduction of a state-backed income insurance scheme.

National promised to repeal the Conduct of Financial Institutions Act (CoFI), due to come into force in March 2025, which they’ve said “makes credit more expensive and harder to obtain even for basic services such as overdrafts and mortgages”. Meanwhile, Katrina Shanks, chief executive of Financial Advice NZ, has said it would be ‘preferable’ to tweak CoFI, rather than scrap it altogether, as the industry is very supportive of legislation that endorses good conduct and culture within the sector.

National has promised to roll back measures brought in by Labour including the Credit Contracts and Consumer Finance Act (CCCFA), with their rebuilding the economy plan saying they will “Cut financial red tape that is stifling investment, including significantly reducing the scope of the CCCFA which has restricted access to credit.”

National has said they will allow people to split their KiwiSaver between multiple providers, which they say will ‘drive innovation, boost competition and put downward pressure on fees’, though industry players have reservations around the complexity and added costs of doing this. Another tweak to the KiwiSaver scheme they have promised is allowing young people to use their retirement savings to pay a rental bond. Instead of tinkering with the scheme, the FSC is instead calling for a comprehensive review of KiwiSaver settings.

One of the agenda items on National’s 100 day action plan is to remove the Reserve Bank’s dual mandate (of managing inflation and supporting maximum sustainable employment) to get the RBNZ purely focused on getting inflation down to targeted levels.

From a health perspective, National’s 100 day action plan includes extending free breast cancer screening for women aged up to 74, from the current cutoff of 69 years of age. National have said they will allocate $280 million in ring-fenced funding to PHARMAC over four years to pay for 13 cancer treatments not currently funded in NZ. National have said they will deliver faster access to mental health services through their Mental Health Innovation Fund, which will initially see up to $20 million in matching funds distributed to community mental health organisations who are delivering strong results for Kiwis in need. They have pledged to extend free postnatal stays for mothers of newborn babies to three days and provide free continuous glucose monitors to type 1 diabetics aged under 18.

National’s five major targets for health will be:

·         Shorter stays in emergency department – 95% of patients to be admitted, discharged or transferred from an emergency department within six hours.

·         Faster cancer treatment – 85% of patients to receive cancer management within 31 days of the decision to treat.

·         Improved immunisation – 95% of two-year-olds receiving their full age-appropriate immunisations.

·         Shorter wait times for first specialist assessment – a meaningful reduction in the number of people waiting more than four months to see a specialist (target to be set in government).

·         Shorter wait times for surgery – a meaningful reduction in the number of people waiting more than four months for surgery (target to be set in government).

To attract and retain more healthcare workers they have said they will incentivise more people to study nursing and midwifery with a bonding scheme that will pay their student loan for five years if they commit to working in New Zealand. They have said they will establish a relocation support scheme, offering up to 1000 qualified overseas nurses and midwives relocation grants worth up to $10,000 each to support their move to New Zealand. National have pledged to establish a third medical school at the University of Waikato, with satellite training centres in regional areas. They’ve also said they will increase the number of medical school placements at Auckland and Otago by a total of 50 per annum from 2025.

We will be closely following these proposals and will report back as and when things change.

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