New Zealand’s banking sector is calling for a revision rather than a repeal of the Credit Contracts and Consumer Finance Act (CCCFA) and the Conduct of Financial Markets (Conduct of Institutions) Amendment Act (CoFi). This comes amid concerns that the current regulations may be too stringent, potentially stifling the financial industry’s growth and efficiency.
Banks have expressed a preference for the government to refine existing legislation to improve operational efficiency while maintaining the core objectives of the current laws. They argue that the CCCFA has not fully achieved its foundational goals, particularly in protecting vulnerable borrowers, and suggest amendments to reduce the severity of penalties and provide a ‘safe harbour’ for self-reporting institutions.
The banking sector has already invested significantly in complying with these regulations, and a complete repeal could lead to unnecessary costs. Instead, banks advocate for more guidance and a reduction in red tape to facilitate smoother business operations.
The Call for Clarity
The lack of clear direction from the government, especially regarding CoFi, has been a point of contention for banks. They are seeking quick clarification to align their operations with the regulatory expectations. The rising costs of regulatory compliance, particularly the new climate reporting requirements, have also been highlighted as a concern, with banks calling for certainty on the requirements and the extent of the disclosures.
The Path Forward
As profitability margins remain tight, with a mere 0.28% increase to $7.21 billion, banks are cautious about the impact of regulatory changes on their operations. The industry is hopeful that the government will consider their feedback and work towards regulations that balance consumer protection with the banks’ ability to operate effectively and contribute to the economy.
