Government Announces Major Reforms to Simplify Access to Finance for Kiwis

The proposed reforms include clarifying the roles and responsibilities of financial institutions and enhancing the licensing and enforcement tools to ensure compliance.

Commerce and Consumer Affairs Minister Andrew Bayly has unveiled a series of financial reforms aimed at making it easier for New Zealanders to access finance. These reforms seek to simplify the financial landscape, reduce regulatory complexity, and promote a more proportionate approach to consumer lending.

Bayly emphasized the vital role financial services play in the economy, noting that without easy access to finance, economic activity would stall. However, he acknowledged that years of regulatory changes have created a convoluted system, resulting in conservative lending practices, overlapping institutional roles, and a burdensome compliance environment for businesses. These conditions have, in some cases, made it difficult for consumers to secure loans.

The proposed reforms include clarifying the roles and responsibilities of financial institutions and enhancing the licensing and enforcement tools to ensure compliance. In a significant shift, the personal liability for directors and senior managers will be transferred to businesses, easing the pressure on individuals while still maintaining accountability.

Additionally, consumer lending regulation will transition from the Commerce Commission to the Financial Markets Authority (FMA), which will be equipped with new powers for market oversight. Lenders will move to a licensing model at no cost, and the FMA will gain greater authority to protect consumers, including powers to monitor changes in firm ownership and conduct onsite inspections.

These reforms represent a move away from overly prescriptive lending rules to a more risk-based approach. Enforcement will now focus on cases of genuine financial harm, fostering a more balanced and efficient financial sector.