Government Erroneous Interventions Into Banking Law

The government announced in March that it was “making practical amendments” to responsible lending rules to curb any unintended consequences being caused by the Credit Contracts and Consumer Finance Act (CCCFA).

The law changes were specifically designed “to stop vulnerable people from finding themselves with unaffordable debt.” This is quoted from Hon Dr David Clark, commerce and consumer affairs minister’s own press release.

Subsequently, after overt issues were raised with these amendments, the government announced in June urgent “tweaks” to correct newly created issues with lending criteria.

Unfortunately, bureaucrats assessing banking problems from offices in Wellington using excel spreadsheets instead of practical knowledge, may potentially miss real world applications for such law changes. Few if any amendments made by government undergo basic feasibility studies prior to release.

Regardless of the good intentions behind such law changes, there are negative impacts to the same “vulnerable people” government wanted to protect.

Students are having difficulty getting credit lines to make payments such as for driving examinations, as this requires a credit card for online signup.

Māori and Pacifica applying for banking credit are being turned away due to lack of assets or other stipulated criteria, inhibiting access to small business loans, loans for auto payments, credit cards, and other banking needs.

Moreover, the new laws may have unintentionally created a subtle means for potential discrimination against specific groups or individuals.

In a real world practicality test an attempt was made to open a new bank account and identify potential limitations to the new amendments. In this superficial review it was identified that those wanting to sell their Naan’s gold necklace or those who purchased DogeCoin (cheap crypto currency) would be inhibited from any banking.

Even though the original amendment announced a focus on responsible lending, the criteria it included now results in ALL banks asking new account requestors questions which are dubious, including the following:

- Have you sponsored state terrorism?

- Are any of your proceeds from crime or criminal activities?

- Are any of your proceeds from the sale of gold?

- Are any of your proceeds from the sale of cryptocurrency assets?

Answering YES to any of these above results in limitations to opening a new bank account.

As a number of students have tinkered with cryptocurrency, this becomes a flag for opening a new account for students, inhibiting a number of individuals from obtaining an account in the first instance.

Moreover, the attempt for a student to obtain a loan for a new auto or credit card has also been substantially made more difficult specifically as a result of the application of this banking amendment.

These questions also correlate serious international crimes with the sale of family jewelry such as Naan’s old gold necklace, for instance.

Sale of family jewelry is often the result of difficult economic circumstances and should most likely not be a component of whether an individual may open a new bank account.

It becomes overt how government changes “to stop vulnerable people from finding themselves with unaffordable debt” has resulted in various hurdles being placed for opening new bank accounts.

This can be juxtaposed to the fact that wealthy individuals performing these same tasks, but who own multiple assets, can quickly open new lines of credit, and obtain loans.

DIFFICULTY FOR RESPONSIBLE LOWER INCOME INDIVIDUALS AND STUDENTS TO OBTAIN ANY FORM OF CREDIT

The “practical amendments” to responsible lending rules made by the government have made it more difficult for responsible lower income individuals and students to obtain any form of credit. Credit is imperative for the development of credit scores, loans for homes and autos, palatine healthcare costs, or improving a small business.

The “tweaks” announced by the government have made it easier for EXISTING credit holders and bank accounts, but done little to help students and minority groups, which are further being shut out from lines of credit.

Regardless what the government intentions were behind adjusting banking law, it is apparent that the people writing the laws have limited understanding of the real world practical results of these amendments.

Any new banking legislation should include some form of feasibility study or practicality testing prior to wholesale implementation.

Refer to

https://www.beehive.govt.nz/release/govt-updates-responsible-lending-rules

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