Law firm warns of burden on lenders

AUCKLAND: The plethora of new consumerrelated legislation and regulation coming into effect simultaneously may have unintended consequences for those seeking loans, according to a leading law firm.

A lot of the changes were put on hold during the pandemic, but are now close to coming into effect, including fair trading reforms, changes to the Credit Contracts and Consumer Finance Act and the commencement of the Financial Services Legislation Amendment Act.

Chapman Tripp senior associate Luke Ford said consumer protection — the backbone of most of the changes — was a worthy goal, however the administrative burden on lenders would be high.

‘‘We’ll have [conduct licensing] being addressed by the FMA and RBNZ, and then similarly you’ll have the Commerce Commission looking at how the consumer lending is done — oppressive conduct — things like that.

‘‘Which could all come together simultaneously when you’re providing lending to consumers, so you may well have to be addressing different interpretations, different requirements from different regulators simultaneously . . .’’

It was important the right balance between protecting the vulnerable and managing the burden was struck, Mr Ford said.

‘‘There’s a good chance we’ll see both an increased difficulty in getting credit [due to] more requirements that have to be met, particularly for those who are selfemployed or don’t have easy access to longstanding credit records . . . Difficult for them to meet the requirements that banks and other lenders will now have to put on them.

Additional time would mean ‘‘additional cost, which will inevitably be passed on to some degree’’.