Lenders React To New “No Surprises” Lending Code

The FSF is pleased to see that the new Responsible Lending Code has landed with no nasty surprises.

The change is part of the Government’s new vision for the regulation of New Zealand’s overly complex financial services sector - one that recognises not all Kiwis are vulnerable consumers.

The Code has been approved by Cabinet on the recommendation of the Minister of Commerce and Consumer Affairs and will come into effect on 31 July.

“We are pleased to see no nasty surprises in the new version of the Responsible Lending Code, and that the commitment has been kept to balance consumer protection with the ability for New Zealanders to access responsibly provided credit when life calls for it,” says FSF Executive Director, Lyn McMorran.

“I think we can congratulate the Minister and the officials on getting this out within the tight timeframe set by the Minister to implement the revocation of the affordability regulations which he announced a couple of months ago.

“The requirement of a 28-day period for the Code to be gazetted will provide lenders with the certainty they’re looking for with respect to what level of discretion they will be allowed in their affordability assessments from 31 July onwards.

“The revocation of the regulations and the revised Code are certainly an improvement on what lenders and consumers were faced with from 1 December 2021, so that is further reason for congratulations to the Minister and his officials.

“We are supportive of targeted measures to protect vulnerable consumers, such as introducing a definition for what constitutes a high-cost lender. But a regime where lenders aren’t required to treat every customer as vulnerable by default, is a return to commonsense.”

About the Financial Services Federation:

The (FSF) is the non-profit industry association for non-bank lenders committed to responsible lending, with its members collectively reaching 1.7 million New Zealanders, and supporting consumers and businesses across the country through innovation and competition.

FSF’s 97 members include ethical finance, leasing and credit-related insurance providers, and include the likes of UDC Finance, MTF, Auto Finance Direct, several credit unions and building societies, and the finance arms of global motor vehicle brands including Toyota, Nissan, Honda, BMW, and Mercedes-Benz (see the full member list here).

With 58 years of history, FSF has stringent membership criteria and enforces a Code of Conduct to maintain high standards in responsible non-bank lending. FSF members prioritise compliance, support consumer protection enforcement, and advocate for balanced regulations that ensure New Zealanders have access to responsibly-provided credit.

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