The Government has announced it will reform financial services in a bid to make it easier to get home loans and other lending, and strengthen customer protections.

Commerce and Consumer Affairs Minister Andrew Bayly and Housing Minister Chris Bishop made the announcement on Sunday afternoon. It comes as part of the National-ACT Coalition agreement to update the Credit Contracts and Consumer Finance Act.

Bayley said regulations introduced by the last government created unnecessary compliance costs and an excessive barrier for lending.

“We are revoking 11 pages of overly prescriptive affordability regulations, introduced by the last government, to enable Kiwis to access finance with confidence,” Bayly said.

“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.”

He said it became very difficult for people to borrow $500 to fix their car, forcing them to go to high-interest loan sharks.

The changes would still require lenders to act responsibly, but they would not have to follow a prescriptive, one-size-fits-all process, he said.

Housing Minister Chris Bishop said the time it took to process a home loan had increased substantially, making it harder for people trying to get into the market.

“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,” Bishop said.

The detailed requirements for assessing the affordability of loans is expected be revoked in coming months.

The Responsible Lending Code will be updated to clarify for lenders how they are expected to ensure lending is affordable once the affordability regulations have been revoked.

Redundant Covid-19 exemptions from the CCCFA will also be removed.

Part of the announcement on Sunday includes changes to the dispute resolution scheme, exempting councils from the CCCFA, removing some “duplicate” reporting requirements.

What are the changes to the dispute resolution scheme?

The government said it would break down changes into two phases. Phase one includes changes to lending, as above, and some of the below.

The rules of the four approved financial dispute resolution schemes – Banking Ombudsman, the Insurance and Financial Services Ombudsman, Financial Services Complaints Limited, and the Financial Dispute Resolution Service – will be aligned and the maximum amount the schemes can award will increase to $500,000.

The regulations providing for the changes will be in place by 18 July.

The government is also supporting the proposed merger of the Insurance & Financial Services Ombudsman Scheme (IFSO) and the Financial Services Complaints Limited (FSCL) from 1 July 2025, which was announced on 19 April.

The government hoped this would help streamline services, create operational efficiencies, and remove duplication.

Exemptions under CCCFA

By 25 April, local authorities will be exempted from the CCCFA to allow them to administer voluntary targeted rates schemes – such as loans to install insulation or heat pumps – without incurring unnecessary compliance costs.

By the same date, entities whose primary business is non-financial goods and services, such as

certain car dealers, will be fully exempted from duplicative reporting requirements under the CCCFA.

New role for Financial Markets Authority

Earlier this year, Bayly had announced the responsibilities for overseeing CCCFA would be transferred from the Commerce Commission to the Financial Markets Authority (FMA).

The minister said this change better aligned with the existing roles and responsibilities of the various financial service regulators.