Non banks and finance companies say banks should not get special treatment

Non-bank lenders and finance companies say they object to being left out of National Party plans to reform the Credit Contracts and Consumer Finance Act (CCCFA).

They say the plans are discriminatory.

The comments follow a CCCFA programme outlined to about 500 business professionals at the annual conference of Financial Advice NZ. in Christchurch.

During a speech, the party leader Christopher Luxon called the CCCFA “dumb” and “badly drafted”, and said it could be fixed in two stages.  

First, the main banks could be excluded from the CCCFA as an interim measure to provide urgent relief for the hard-pressed home lending business. 

While that was done, substantive work would get underway to craft a new and better law as a final replacement for the CCCFA.  . 

Luxon said the plan would not undermine consumer protection in the lending business because the main banks were already well regulated.

The change would happen if the party won the next election, but in the meantime a private members bill was making the same point.  . 

Luxon said this proposal would not apply to non-bank lenders, nor to mortgage advisers. 

The Financial Services Federation (FSF) represents finance companies of which about  60 are non-bank lenders.

Lyn McMorran is the executive director of the federation and says she is concerned that Luxon is proposing to ease the impact of the CCCFA on one group of people and not on the others.

“FSF members represent 1.7 million customers who deserve to be treated as well as the customers of the main banks, she said.

“The leader of the opposition is suggesting that one group of New Zealanders should get a competitive advantage over another

“That's just not reasonable and his  argument that the banks are heavily supervised and heavily regulated doesn’t wash because the non-banks are also heavily regulated and heavily supervised.”

“There should be a level playing field.”

McMorran argued the proposed changes would make it harder for her members to do business.

“The banks would have an easier ride, because people would be incentivised to go to banks where it would be easier to get credit.

“It would mean that borrowers did not have the choice that they currently have.”

McMorran’s argument was that the CCCFA was supposedly passed to guard against predatory lending, but ended up catching responsible lenders in the same net.

But if Luxon was proposing to excuse some of those responsible lenders from an onerous law, he should do the same for the others.

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