Whānau should not face a position where lending that was always going to be unaffordable causes or compounds hardship. The onus must be on lenders to not disregard that collection on due repayments is likely to cause harm.
FinCap welcomes the opportunity to comment on the Ministry of Business, Innovation and Employment (MBIE) Credit Contracts and Consumer Finance Amendment Regulations (No 2) 2022 and updated Responsible Lending Code Consultation Paper (Consultation Paper).
Overall, we are concerned that the implementation of these policy changes could permit some lending that was always unaffordable and in doing so create avoidable financial difficulty and stress for whānau as well as extra work for financial mentors. We urge MBIE to be extremely careful and ensure the changes to the regulations or Responsible Lending Code (Code/guidance) are drafted so there is still an onus on lenders to consider the unique circumstances and objectives of a potential borrower and to respond responsibly once this information is gathered. Such requirements will avoid giving the ‘green light’ to irresponsible lending.