New Zealand and Australia are heading in opposite directions when it comes to protecting consumers.
A report by law firm Chapman Tripp warns the tightening of New Zealand's consumer protection laws was out of step with Australia and likely to restrict and raise the cost of borrowing.
"The (New Zealand ) reform process has led to greater restrictions on high-cost loans, including a 'cost of credit cap', and stricter responsible lending obligations (including tougher penalties)," the report says.
"Compliance with these new requirements will come at great cost to New Zealand lenders, particularly in terms of IT (and other) system and process changes."
Report author and Chapman Tripp partner Emma Sutcliffe said New Zealand should consider following Australia's lead.
The Australian government was taking steps to ease up on responsible lending obligations to make it cheaper and easier for consumers to get a loan.
Amendments to Australia's National Consumer Credit Protection Act would remove responsible lending requirements, including the need for extensive verification processes.
It would also replace the current practice of 'lender beware' with a 'borrower responsibility' principle, in addition to other measures designed to simplify and streamline processes for lenders and borrowers.
She said New Zealand's tougher regulations would ultimately result in a tightening of consumer credit at a time when the Reserve Bank was calling for an easing.