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Supporting Better Financial Outcomes For Kiwis

Hon Chris Bishop 
Minister of Housing 
Hon Andrew Bayly 
Minister of Commerce & Consumer Affairs

The Government is reforming financial services to improve access to home loans and other lending, and strengthen customer protections, Commerce and Consumer Affairs Minister Andrew Bayly and Housing Minister Chris Bishop announced today.

“Our coalition Government is committed to rebuilding the economy and making life simpler by cutting red tape. We are revoking 11 pages of overly prescriptive affordability regulations, introduced by the last government, to enable Kiwis to access finance with confidence,” Mr Bayly says.

“These regulations created unnecessary compliance costs and are an excessive barrier for lending. And worse, the regulations failed to protect the most vulnerable Kiwis – the very people they were intended to safeguard.

“When the affordability regulations were introduced into the Credit Contracts and Consumer Finance Act 2003 (CCCFA) in December 2021 it threw a bucket of cold ice over banks and financial providers by prescribing minimum steps to assess the affordability of a loan. The overly arduous checks meant the time it took to process loans dramatically increased. Lenders told me that a small loan that used to take two hours to process suddenly took up to eight hours.

“This meant it was no longer affordable for many providers to offer small loans. It became very difficult for everyday Kiwis, who need $500 to fix their broken-down car, to access a safe line of credit. They were effectively frozen out of the market and many vulnerable Kiwis were instead forced to borrow from high-interest loan sharks,” Mr Bayly says.

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Housing Minister Chris Bishop says the time it took to process a home loan increased substantially and thousands of Kiwi families, who would have previously qualified, were locked out of the market.

“The changes announced today will make the home loan application process simpler for hardworking Kiwis who have diligently saved to buy a house.

“Home buyers have had it hard enough over the past six years under Labour, what with extraordinary house price inflation, interest rates that went through the roof causing untold pain, and these ridiculous CCCFA changes making it much harder to get a mortgage,” Mr Bishop says.

“The previous government tried to amend the regulations, but they failed to fully address these unintended, bad outcomes. Lenders are still required to treat all borrowers with the same amount of risk regardless of whether they want a $1,000 overdraft or $1 million home loan.

Today’s changes will still require lenders to act responsibly and ensure lending will not cause hardship, but lenders will not have to follow a prescriptive, one-size-fits-all process,” Mr Bayly says.

This announcement is part of the National-ACT coalition agreement to update the CCCFA to protect vulnerable consumers.

Revoking the affordability regulations is accompanied by a package of reforms also announced today. The government has made Regulations that:

  • Improve dispute resolution to better protect consumers. (See attached fact sheet for further information.)
  • Exempt councils from the CCCFA so they can offer low-risk financial products to help households improve their energy efficiency by installing heat pumps and insulation.
  • Remove duplicate reporting requirements.

“This is only the first phase of financial reforms. We will open public consultation on a range of matters in the coming weeks, including other known pain points,” Mr Bayly says.

"Kiwis must be able to access financial services safely without unnecessary hurdles. These reforms reinforce our government’s commitment to provide regulatory clarity, protect vulnerable consumers, and grow the economy.”

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