2024 financial services reforms

About the reforms package 

In January 2024, the Minister of Commerce and Consumer Affairs announced plans to reform aspects of New Zealand’s financial services regulation.  

The financial services regulatory landscape has become increasingly complex over the years, and these reforms aim to remove unnecessary compliance costs currently imposed on financial services. The package of reforms will improve outcomes for consumers by ensuring New Zealanders can confidently access the financial products and services they need in a way that is safe. 

Together, these reforms aim to provide regulatory clarity, protect vulnerable consumers and grow the economy. 

MBIE will publicly consult on revisions to the Responsible Lending Code, and possible amendments to the Credit Contracts and Consumer Finance Act (CCCFA), including changes to the high-cost credit provisions, Conduct of Financial Institutions (CoFI) and conduct licencing, and financial dispute resolution in the coming months. 

Related information: 

Reducing barriers for financial services(external link) — Beehive.govt.nz 

Speech at Financial Services Council Outlook 2024(external link) — Beehive.govt.nz 

Phase 1 

Phase 1 of the reforms involves:

• Regulations under the CCCFA to fully exempt: 
  • voluntary targeted rates schemes provided by local authorities from the CCCFA – such as loans to install insulation or heat pumps – without the need to pay additional compliance costs. This exemption will take effect by 25 April 2024. 
  • entities whose primary business is non-financial goods and services, such as certain car dealers, from duplicative CCCFA reporting requirements. This exemption will take effect by 25 April 2024. 

Credit Contracts and Consumer Finance Amendment Regulations 2024(external link) — New Zealand Legislation

• Regulations under the CCCFA to: 
  
  • revoke redundant regulations relating to COVID-19  
  • revoke prescriptive affordability requirements in the Credit Contracts and Consumer Finance Regulations 2004 that were intended to clarify what constitutes reasonable inquires to assess whether a borrower can make the repayments for a prospective loan without suffering substantial hardship. 
• Amending the Responsible Lending Code to support lenders to responsibly ensure lending is affordable once the affordability regulations have been revoked.   
• Regulations to align certain jurisdictional rules for the four approved financial dispute resolution schemes. The Dispute Resolution Scheme rules regulations will be in place by 18 July 2024.  

Financial Service Providers (Rules for Approved Dispute Resolution Schemes) Regulations 2024(external link) — New Zealand Legislation

Phase 2 

Phase 2 will involve a more substantive review of various pieces of financial services legislation, including: 

• Progressing legislative reform to transfer regulatory responsibility for the CCCFA from the Commerce Commission to the FMA. 
• Reviewing obligations imposed on financial institutions under the Financial Markets (Conduct of Institutions) Amendment Act 2022, alongside reviewing the conduct licensing framework in the Financial Markets Conduct Act 2013 to improve clarity, remove unnecessary compliance costs and improve outcomes for consumers.  
• Reviewing the CCCFA to: 
  • assess the effectiveness of the CCCFA’s high-cost credit provisions and consider any reforms to ensure those provisions meet their objectives  
  • address potential areas of under-performance, including the liability settings and disclosure obligations 
• reviewing the accessibility and effectiveness of the financial dispute resolution system. 

Other relevant links

Supporting better financial outcomes for Kiwis(external link) — Beehive.govt.nz

Conduct of financial institutions regime

Review of consumer credit law