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Banks are back under the microscope as the Government faces mounting pressure to investigate their eyewatering profits.

A spokesperson for the NZ Banking Association said it would be a matter for the government.

The New Zealand Banking Association in October submitted to the Ministry of Business, Innovation and Employment about introducing a permanent exemption to enable banks to provide customers with emergency credit in cases like natural disasters.

A report released today shows financial mentors and their clients are benefiting from a partnership between FinCap and the New Zealand Banking Association – Te Rangapū Pēke. The partnership, which is funded by NZBA’s member banks, provides $5 million over five years to fund initiatives that support financial mentoring for people in need.

FinCap chief executive Ruth Smithers says: “It’s great to see some real benefits coming out of the partnership. Financial mentors work with people in communities right across New Zealand, ranging from whānau and rangatahi to older people.

“We’re seeing some very valuable outcomes across the five project areas, such as building a better picture of what clients are experiencing through data analysis and insights, which in turn helps us develop our services.

“Being able to provide better information resources and training for financial mentors also positions them to better support their clients. We couldn’t deliver all this without the funding provided through the partnership.”

NZBA chief executive Roger Beaumont says: “Although our funding partnership with FinCap has been going for over two years now, it seems especially relevant now as New Zealanders face increased cost of living issues and other financial challenges.

“We’re particularly pleased with the banking collaborations, which are designed by local financial mentoring services to meet the needs of people in their communities. These initiatives help people in remote locations access online banking services and provide broader education sessions.

“The partnership puts $1 million a year into helping financial mentors help the people who need it most. We’re delighted to provide this support through the partnership.”

The partnership funds five key projects. The 2022 FinCap NZBA Partnership Report summarises what has been delivered in these areas:

The FinCap NZBA Partnership Report is available here: https://www.fincap.org.nz/2022-fincap-nzba-partnership-report/.

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New Zealand’s banks are offering a range of support to customers and communities affected by Cyclone Gabrielle, including making $1.4 billion available in low-cost lending and donating $6.5 million to disaster relief funds.

“The impact of the Cyclone Gabrielle is devastating at every level. Banks are part of the communities that have been hit by the cyclone and they’re working hard to support affected customers and staff,” says New Zealand Banking Association chief executive Roger Beaumont.

“To date banks have made $1.4 billion available in low-cost lending for affected businesses and households to help them build back better and smarter. That helps support the medium to longer term recovery.

“Our banks have also donated $6.5 million to disaster relief funds. Many cyclone-affected communities need relief right now, and banks are joining other generous New Zealanders to support these communities. Some banks are also helping their customers make donations to relief funds.

“Immediate needs are also being met through cash payments to affected customers. Some banks are offering grants of up to $2500 to people in need, totalling over $4 million in payments so far.

“Banks are also providing support packages to the many farmers and fruit growers affected by cyclone damage.

“To help banks provide emergency lending to customers in need, we’ve worked closely with the government to support amendments to Credit Contracts and Consumer Finance Act regulations. The exemption to the affordability assessment usually required under the regulations means banks can more easily provide temporary overdrafts and home loan top ups for up to $10,000 to customers in affected areas.”

Depending on the bank and the circumstances involved, other assistance may include:

“Anyone who has been financially affected by the cyclone should contact their banks to discuss what assistance may be available to meet their particular needs,” says Beaumont.

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“ATMs need both power and an internet connection to function, which means a generator alone might not be enough to facilitate access to cash in an event like Cyclone Gabrielle.”

The banking industry supports the government’s recently announced affordability assessment exemption for customers affected by the recent damaging weather events.

“Banks want to provide as much support as possible to those affected by the recent weather damage in the North Island,” says Roger Beaumont, chief executive of the New Zealand Banking Association – Te Rangapū Pēke.

“The temporary exemption to some of the affordability requirements in the Credit Contracts and Consumer Finance Act will assist banks to speed up the finance application process for those who need it.

“Banks will be able to use the exemption and make decisions depending on the customer’s circumstances.”

Banks can apply the exemption to overdrafts and home loan top ups of no more than $10,000. The exemption ends on 31 March 2023 and is only currently available to those negatively impacted by the floods in the upper North Island in January and February. The government says it will be taking a further exemption to Cabinet on Monday which would mean everyone affected by the floods will be covered.

Anyone affected by the floods who needs assistance should contact their bank.

“Speeding up the lending process will help customers in need. We appreciate the government’s pragmatic approach to this exemption,” says Beaumont.

“In addition to this temporary exemption to some of the lending requirements, banks have also been offering customer support including cash payments, reduced loan repayments, waived fees, access to term deposits, and donations to flood relief funds.”

The amendment to the CCCFA regulations is available at https://www.legislation.govt.nz/regulation/public/2023/0007/latest/whole.html.

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Ministry of Business, Innovation and Employment (more…)

“Any decisions about new customers are based on the bank’s own policies and risk appetite, alongside their regulatory and legal obligations.”

“The banking industry has engaged with the current CCCFA reforms every step of the way,” chief executive Roger Beaumont said.