“We welcome any investigation into the unintended consequences of the new lending rules. In our submissions on the CCCFA law change and new regulations we’ve set out our concerns all along the way.”

The New Zealand Bankers’ Association chief executive Roger Beaumont told Stuff the law change meant banks had “much less flexibility or room for lender discretion than was previously the case.”

“Banks are very much in the business of lending. They are also responsible lenders and take requirements to comply with the law very seriously.”

“The new [CCCFA] rules are fairly tight and there’s much less flexibility or room for lender discretion than was previously the case. For example, you might need to provide evidence of recent transactions so your bank can get a clear idea of your debts and expenses. This means it will take longer to get a loan, and more applications may be declined because the deeper dive into your finances might show you’re less able to repay the loan.”

While the New Zealand Bankers Association warned in its submission that proposed laws changes “may” lead to more conservative lending, Watson told MPs it was inevitable.

Recent submissions on the government’s Emissions Reduction Plan (ERP) from the Sustainable Business Council (SBC), New Zealand Bankers’ Association (NZBA) and Toitū Tahua, the Centre for Sustainable Finance (TT CSF), show an extraordinary willingness among the private sector to engage collaboratively with government on the climate transition and emissions reductions pathways.

“The law change was meant to help vulnerable consumers avoid unaffordable debt. It’s also affecting people seeking home loans, where there are traditionally very low rates of borrowers being unable to make repayments. That’s still the case, but the law change has tightened banks’ ability to lend.”

“One key to reducing harm from problem debt is supporting access to responsible, lower-cost borrowing. However, in our view, several of the proposed changes may unintentionally lead to conservative lending practices to the detriment of consumers,” said the NZBA.

Financial mentors in small communities are helping people access banking services thanks to a partnership between FinCap and the New Zealand Bankers’ Association.

A partnership agreement announced in March is now delivering for people living in places from Balclutha to Murupara through a Banking Collaboration Project funded in the first year of the partnership.

Under this project, Murupara Budget Advisory Service has set up a digital literacy hub consisting of computers, scanners, printing supplies, and a person dedicated to helping clients use these tools to access banking services.

“Phasing out cheques and the slowing of postal services means people are worried about missing bill payments. We’re seeing people get on top of their payments by helping them manage their payments online,” says Manager Carolyn Meihana.

“In one case an older client was shocked to be reprimanded for not paying a bill on time. She’d tried to pay by cheque and it didn’t get there in time. She’s now a regular at the hub and is very happy to be able to pay her bills on time and straight way.”

Amy Senada, Banking Services Coordinator at Clutha Budget Advisory Service, gives practical banking support to clients who need it – including visiting people in their own homes.

One of her clients, a mother with learning disabilities with a young son, had trouble doing her banking.

“I walked her through the process of setting up banking on her mobile phone. It took a bit of time but once it was all set up she was stoked. It has made her life so much easier. It’s all about encouraging people to recognise their own strengths.”

FinCap Chief Executive Ruth Smithers says: “It’s fair to say some of our financial mentors were a bit sceptical about the NZBA partnership at first. It’s shown us the benefits of working together to support good outcomes for both our financial mentors and their communities.”

New Zealand Bankers’ Association Chief Executive Roger Beaumont says: “We hadn’t expected the partnership to deliver tangible results so quickly. We’re delighted this helps people understand and make the transition to digital banking through initiatives designed by and for the communities they serve.”

In the first year of the partnership banking collaboration initiatives have been funded in Murupara, Balclutha, Central Hawkes Bay, Bay of Islands, Paeroa and Taumaranui. Each initiative has been designed by the local financial mentoring service to meet the needs of the local community. Each initiative aims to help communities with access to banking services by assisting them with banking online or by phone, and in some cases by driving them to the nearest bank branch.

ENDS

Rather than see this as a matter for the banking industry as a whole, the New Zealand Bankers Association says it is an issue for each member institution to decide based on lending policies and appetite for risk, which would vary from bank to bank.