Commerce and Consumer Affairs Minister Andrew Bayly says the coalition government will reform, rather than scrap, the incoming conduct licensing regime for banks, insurers and non-bank deposit takers, and transfer oversight of the Credit Contracts and Consumer Finance Act (CCCFA) to the Financial Markets Authority from the Commerce Commission.
These were key points Bayly made in a speech on Wednesday morning to a Financial Services Council conference.
Prior to the election the National Party had pledged to repeal the Conduct of Financial Institutions Act (CoFI) saying it; "makes credit more expensive and harder to obtain, even for basic services such as overdrafts and mortgages."
Bayly now says; "CoFI serves an important purpose to support good financial outcomes for consumers, but it needs streamlining so financial institutions have certainty and flexibility to get on with the business of delivering for their customers."
The CCCFA will also be reformed, he says, to "ensure vulnerable consumers are protected without preventing Kiwis getting the credit they can afford."
Bayly's full speech is below.
Reducing barriers for financial services
The Government will reform financial services regulations, ensuring clarity and cutting red tape for both institutions and Kiwis, Commerce and Consumer Affairs Minister Andrew Bayly announced at a Financial Services Council conference today.
The reforms will address aspects of financial market conduct regulation and areas of overlap and duplication by the key regulators, in addition to simplifying licensing requirements.
“Excessive layering of regulation and legislation has led to loss of coherence in governance of the financial sector, and while well intentioned, are failing to deliver optimal outcomes for Kiwis and businesses.
“At present some financial institutions find themselves accountable to three regulators; namely the Reserve Bank of New Zealand (RBNZ), Financial Markets Authority (FMA) and Commerce Commission.
“We will move to a simplified model, with the RBNZ being the prudential regulator, and a single conduct regulator being the FMA. To achieve this, conduct oversight of the Credit Contracts and Consumer Finance Act (CCCFA) currently performed by the Commerce Commission will transfer to the FMA.
“Many financial institutions find themselves holding multiple licenses from both the FMA and the RBNZ, adding to operational burden. We want to simplify this by moving to one conduct licence overseen by the FMA, and one prudential licence by the RBNZ.”
Mr Bayly also announced plans to reform the Financial Markets (Conduct of Institutions) Amendment Act (CoFI) and the CCCFA at the conference today.
“CoFI serves an important purpose to support good financial outcomes for consumers, but it needs streamlining so financial institutions have certainty and flexibility to get on with the business of delivering for their customers.
“The primary responsibility for developing appropriate Fair Conduct Programmes (FCP) lies with the board and management of the financial institution. This means that it is up to the financial institution to identify key areas of risk and tailor them appropriately. However, it is my expectation that the FMA will provide clear guidance as to the minimum requirements to ensure the FCPs are sufficiently developed.
“For example, a FCP will look different for a credit union with two hundred customers compared to a bank with two million, but the importance of fair treatment remains the same”, Mr Bayly said.
The CCCFA will also be reformed, to ensure vulnerable consumers are protected without preventing Kiwis getting the credit they can afford.
“These over-prescriptive consumer lending laws have led to Kiwis missing out on loans.
“This is another important step in meeting our coalition agreement with ACT, to rewrite the CCCFA to protect vulnerable consumers without unnecessarily limiting access to credit. The Government is proposing a two-step process to amend the CCCFA, which changes to be announced over the coming months.”
Mr Bayly also stated that it is his intention to simplify, modernise and digitise the Companies Act, as aspects of it are thirty years out of date and could be improved.
“These reforms will improve the business environment for financial institutions so that we can get the economy back on track.”
6 Comments
How embarrassing. What is the point of the new government if they're just going to pile on more regulation like the last government did?
They committed to scrapping this legislation during the election campaign and are now breaking that commitment. The bureaucracy will need to grow as a result of this decision so it's a good thing the government aren't currently seeking ways to cut costs in the public service.
Bring back the old Andrew Bayly.
Repealing and reforming can be not too far apart. If the Nats repeal it and keep say 60% odd of the existing clauses in the new Act, then reforming makes sense. Suspect it is easier to pass reforms in an existing Act than starting a new even if the new Act incorporates a large portion of the existing.
Lol. Believing that financial institutions are in the business of delivering for their customers is delusional. They're in the business of delivering for their owners.
Fair conduct is opposite to risk management.
For example; insurance companies going to extreme lengths, finding every excuse possible not to pay or delaying as long as possible until the customer can't afford to fight them.
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