Beaumont says that recent changes to the Credit Contracts and Consumer Finance Act, which require the same affordability assessments for all borrowers, mean that banks no longer have the discretion and flexibility to help customers in emergencies or cases of economic harm.

“If you want a new mortgage, banks do want to see that history of behaviour and activity. But that’s a good example of where open banking in play will make that analysis by a competitor bank a whole lot easier. Because the data exchange will be a whole lot simpler than filling out a whole lot of paper forms or going through a painful process,” Beaumont says.

In its submission on the proposed regulation, the NZ Bankers Association said all BNPL inquiries should have to comply with the credit law’s affordability principle. “There is no clear justification for treating BNPL contracts differently to other consumer credit contracts.”

New Zealand Banking Association chief executive Roger Beaumont said bank profits looked big because they were among the country’s biggest companies. “They employ over 28,000 people in New Zealand and lend over $540b to fund household and business needs. Last year banks made a net contribution to our economy of $1.92b. They spent $9.1b running their businesses and paying tax in New Zealand, compared to combined profits of $7.18b.”

“Last year banks made a net contribution to our economy of $1.92 billion. They spent $9.1 billion running their businesses and paying tax in New Zealand, compared to combined profits of $7.18 billion … Our banks’ average return on equity is 13.4%, which falls in the middle of the pack when compared to other major New Zealand companies.”

Kensington’s comparison was a re-run of a defence of bank profits made in 2012 by the New Zealand Banking Association Te Rangapū Pēke, when average bank returns on equity from 2008 to 2012 ranged from 7.5%​ to 16.3%​.

“We often hear about bank profits going overseas,” says chief executive Roger Beaumont. “That’s half the story. Banks also spend a lot of money here and pay a lot of tax. They actually spend more here than they take away in profits.” He says the net positive contribution to the economy is $1.92 billion. “And that’s before you take into account the contribution banks make in funding household and business needs.”

“Profitable and well-regulated banks are strong banks, and our banks came through the global financial crisis without failures or government bailouts.”

We continue to live in interesting times. Since the arrival of Covid-19 three years ago, provoking an unprecedented response around the world and in New Zealand, nothing seems quite the same. While New Zealand weathered the Covid onslaught relatively well compared to other countries, the economic consequences are still very much with us. Added to that, in the last year we’ve seen war in Ukraine, devastating flooding and cyclone damage in the North Island, and an occupation at Parliament. We’ve also seen our borders re-open with New Zealanders travelling overseas again, and we’re welcoming tourists and migrants.

The National Party this week called for a short, sharp Select Committee inquiry. The Banking Association welcomed National’s call, which is a pretty good indication of how worried the industry was about it.