Lending code receives update

A new version of the responsible lending code has been approved by Andrew Bayly, Minister of Commerce and Consumer Affairs, and will come into effect from July 31.

The revised code replaces chapter five of the April 2023 version, which covers inquiries into and assessment of substantial hardship of borrowers, and follows public consultation this year as the government seeks to reform lending laws.

It will apply from the same date amendments revoking the affordability requirements from the credit contracts and consumer finance amendment regulations come into force.

The government hopes its raft of reforms will make credit more accessible for all New Zealanders.

The code offers guidance on how lenders, including motor vehicle finance providers, may implement lender responsibility principles and regulations.

The Ministry of Business, Innovation and Employment (MBIE) says the final version of chapter five has been informed by submissions on the exposure draft and advice from a code advisory group it has been working with. 

“Views expressed in submissions were very divided on some key questions, and we acknowledge not everyone will agree with the end result,” it adds. 

To view the new responsible lending code, which was gazetted on July 2, click here.

To read more about the proposed changes to lending laws and what the Financial Services Federation has said about them, check out the July edition of Autofile magazine.