Financial services not smothered in red tape: new Minister

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The new Minister of Commerce and Consumer Affairs believes the finance industry shares some of the blame for problems with the Credit Contracts and Consumer Finance Act (CCCFA).

Wednesday, February 8th 2023, 2:29PM 1 Comment

by Eric Frykberg

But Duncan Webb also insists the law has a sound philosophy.

Webb replaced David Clark in the recent cabinet reshuffle. He spoke to Eric Frykberg.

TMMO: How satisfied are you with the progress so far on reforming the CCCFA?

WEBB: I chaired the Select Committee that did some of that work, and we certainly heard from the industry and others that it is a first cut, it is not perfect and we are still working on a good fit. But the philosophy is absolutely right, which is that lenders don't just provide good information but they act fairly and appropriately, and take into account the interests of borrowers.

TMMO: There are some reforms coming through which will be finalised in February. Will they be the last or could there be another look at this?

WEBB: You never say that work is done. Continually maintaining legislation is just good practice, and this is the case with the CCCFA, the Commerce Act and any other piece of legislation.

TMMO: Does the fact that the National Party say they will overturn it, that the lending industry opposed it all along, and that reforms had to start within two months indicate that the law was a bit of a dog in the first place?

WEBB: It indicates that the finance sector wasn't prepared to move with the times. It's a pity that we didn't have great engagement in that regard, because we would have come out with a better and more workable system. We wouldn't be revising it if we had a finance sector that was more prepared to follow international best practice, and put the borrowing and consuming public as an important part of the lending process.

TMMO: Does that mean the sector itself bears some of the responsibility for the fact that the law has been so difficult?

WEBB: I am not going to start laying blame. I totally accept that the first part of that didn't work, and it is the Government's job to get it right, but I am very engaged and very open to frank and open discussions about achieving the policy direction of Government which includes making sure that borrowers are protected from poor lending practices.

TMMO: How much work will you put into full licensing of financial advisers under the FAP regime, or is that mainly down to the Financial Markets Authority (FMA) and not so much the Minister?

WEBB: Look, I will be perfectly honest and say I have just got my feet under the desk, I have had the portfolio for just a little over 24 hours, and I have genuinely not turned my mind to that detail of the portfolio.

TMMO: On a similar matter, the Financial Markets (Conduct of Institutions) Amendment Act, the co-called CoFI law, is that something you have any thoughts about, given that it was called a 'solution looking for a problem' by National?

WEBB: Again, if you want to have a deep dive into some of these issues, I am really happy to do so, but given the amount of time I have been in the portfolio, I will have to go away and have a good think about it. I will be having a briefing with officials on issues like that, and I will turn my mind to them, but I am not leaping into them at an early stage.

TMMO: On a more general level then, it has been claimed that the finance industry is being smothered in red tape. Do you agree with that?

WEBB: No, I don't, and I absolutely want to make sure that industry participants across the board can operate effectively and efficiently, but there is always a balance to be struck. Yes, there are requirements on good lending practices, but at the same time I am really happy to engage with making it a sector where the balance that is struck is right and that there are not additional costs that are imposed on the lender or the borrower.

TMMO: You called yourself a socialist when you entered parliament. Does that make you the right person to be overseeing the finance industry?

WEBB: In terms of my political stance, I see an important role for Government in working with the private sector in making sure that it doesn't run amok but it operates responsibly in the interests of all of the citizens of New Zealand.

Tags: CCCFA

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