FSF backs ComCom report

The Commerce Commission’s draft report on its market study into banking services has highlighted the crucial role non-bank lenders play in providing Kiwis with competition and innovation.

That’s the view of the Financial Services Federation (FSF), which supports the regulator’s recommendations to accelerate progress on open banking and ensure the regulatory environment better supports competition.

More than 1.7 million consumers, including buyers of motor vehicles, choose to work with a non-bank lender represented by the FSF, whose 97 members include the likes of UDC Finance, Avanti Finance, Toyota Finance, MTF, and several credit unions and building societies.

“The report rightly highlights that without sufficient competition and disruption in banking services, including personal lending, New Zealand runs the risk of consumers missing out,” says Lyn McMorran, the FSF’s executive director.

“It’s vital responsible non-bank lenders are empowered to fill this gap and not incorrectly viewed as ‘lenders of last resort’, but are recognised for their entrepreneurship, agility, innovation, competitive edge and their contribution to the economy.”

The federation particularly supports two key recommendations in the commission’s report to enhance the ability of this country’s non-bank sector to reach its full potential as is seen overseas.

The first is to ensure the regulatory environment better supports competition, and that “policymakers and regulators responsible for the personal banking sector explicitly and transparently consider the competitive effects of their decisions”.

McMorran, pictured, stresses: “The FSF believes that a level regulation playing field for all lenders, be they banks or non-banks, is crucial to ensure competition and innovation particularly with regard to personal lending products.”

The federation believes the government’s new vision for New Zealand’s overly complex financial services regulatory landscape – a vision that recognises not all Kiwis are vulnerable consumers – is a good step in this direction.

Another key recommendation in the Commerce Commission’s report, says the FSF, is to accelerate progress on open banking, which will provide a more transparent environment in which consumers are empowered through better ownership of their data to choose or switch providers more easily.

The federation will continue to provide further consultation to the regulator in the run-up to the final report being published in August 2024.