FSF launches Responsible Lending Guidelines

Media release

28 April 2011

Financial Services Federation launches Responsible Lending Guidelines

The Financial Services Federation today launched Responsible Lending Guidelines to improve consumer protection, raise standards across the consumer credit industry, and deliver better outcomes for borrowers and lenders.

"Consumers may need access to credit for any number of reasons, and the non-bank financial sector plays a key role in meeting that need. What's important is that the lending process is fair and transparent, so that there is a clear understanding among both borrowers and lenders about what everyone's rights and obligations are," says Girol Karacoaglu, Chair of the Financial Services Federation.

The guidelines have been developed by the Financial Services Federation with the assistance of a variety of stakeholders including the NZ Federation of Budgeting Services, Consumer NZ, the Families Commission Debt Working Group, the Retirement Commissioner, and officials from the Ministry of Consumer Affairs, and the Ministry of Social Development.

The guidelines set out specific steps that lenders may need to take to assess if a credit contract will be suitable for a consumer. This includes making inquiries into different aspects of a consumer's financial situation, their needs and goals, and ability to make repayments.

"We believe that as well as delivering positive outcomes for consumers, responsible lending practices are critical to the long-term health of the industry. The Federation supports both the specific steps and the principles outlined in the guidelines," says Kirk Hope, Executive Director, Financial Services Federation.

The guidelines include a number of best practice principles lenders will follow, such as how they will work with consumers in financial difficulty.

"Underpinning the guidelines is a commitment by lenders to take an open and reasonable approach in all of their dealings with customers, and to build positive relationships with other agencies that support consumers, such as budget advisory services," Hope says.

ENDS

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