Consumer advocates want the government to bring forward finance legislation delayed because of the Covid-19 pandemic, but others think the proposed changes should be written off altogether.
File photo. Photo: RNZ / Rebekah Parsons-King
The new financial advice regulatory regime, the Conduct of Institutions Bill, and the Fair Trading Amendment Bill are among those delayed while banks, insurers and the government coped with the pandemic.
Consumer New Zealand head of research Jessica Wilson said the delays simply meant protections for vulnerable consumers were not there.
"It is disappointing that we haven't seen faster progress on some of these issues because the problems aren't new."
She said the review of insurance contract law should have been brought forward given the economic climate.
"It's widely acknowledged those laws are out of date and consumers are suffering as a result.
"Those have real hit-pocket effects, it means they end up paying more for products than they need to and that impact is even more pronounced when we're talking about times when people are potentially losing income."
The new financial advice regime was due to come into effect on 29 June and mandated that anyone giving financial advice to retail clients must comply with a number of new duties including to prioritise clients' interests, and comply with a new code of conduct and new disclosure regulations.
The regime was deferred after the Commerce and Consumer Affairs Minister Kris Faafoi received requests from industry groups including Financial Advice New Zealand, Financial Services Council and Insurance Brokers Association of New Zealand. It will likely begin in early 2021.
A Ministry of Business Innovation and Employment briefing confirmed the Financial Markets (Conduct of Institutions) Amendment Bill was also behind schedule.
"At this stage, passage of the Bill this term appears extremely unlikely," the briefing said.
A briefing also stated the Fair Trading Amendment Bill had been delayed "somewhat", due to the pandemic.
In the mix as well was the delay of the Credit Contracts Legislation Amendment Act, which would now be implemented on 1 April 2021. Some parts of the Act focused on high cost mobile lenders have been rolled out.
A discussion document on open banking has been delayed until at least the second half of the year and the KiwiSaver default provider review was also pushed back five months.
KiwiSaver provider Booster chairman Paul Foley said the government should consider revisiting the default provider review.
"Default provider status is important. What default providers do is critical and so it would be good for the government to reassess and see if they'll have the capacity to do it."
"Giving forward-dated referrals was appropriate [at the time] but they should be revisited and brought back if that's feasible."
He said timeframes for the new financial advisors regime should also be revisited.
"The reforms were seen as necessary... if they're necessary they shouldn't be unduly delayed."
"Financial advisors were ready ... if we were in the middle of Covid-19 now the industry would have wanted those extension to occur, but we're not and the industry can be ready, faster."
Foley also said his organisation would be able to do a lot more for consumers once banks were onboard with open banking, and haste was also required in that sector.
However, Simon Jensen from the law firm Buddle Findlay said there was already too much red tape for financial entities.
"My starting point is that things are fundamentally different now... The problem has changed from protecting vulnerable people getting loans that they don't want to now making sure that vulnerable people get loans that they do want."
"And one of the things that's potentially getting in the way of that is a level of red tape that exists already but what you desperately don't want is for them to have more red tape to deal with."
"We don't need a whole lot more licensing or conduct regulation to make [firms] do the right thing."
He said the role of a conduct regulator had changed post Covid-19.
"It's less about regulating the good guys and more about catching the bad guys ... so less work on policy and more work on making sure those who are vulnerable are protected."
"We have a propensity to regulate the good guys and not catch the bad guys so imposing more red tape on the people who are compliant in the first place has a very little net benefit ... you're just making more work for them."
He said if larger, reputable firms were able to assist more customers more quickly, it would negate the need for people to seek out riskier lenders.
"Overall I think we've done the right thing and quite frankly I think we can do even more.
"I think we may find that when we come back to it we'll think 'maybe we didn't really need that'."
