On 9 July, we delivered our second lender webinar for 2024 on financial hardship.
We spoke about what we are hearing from financial mentors, including what we do with the information we receive and what data and insights we gather. We also spoke about lenders’ obligations, including under Chapter 12 of the Responsible Lending Code, as well as our enforcement approach and insights into our complaints/notifications data.
A key message was that we encourage lenders to do more than the minimum set out in subpart 8 of the CCCF Act covering unforeseen hardship. Financial hardship should not be addressed using a one-size-fits-all approach, and lenders need to continuously apply the Lender Responsibility Principles when working with borrowers experiencing hardship.
You can read all the speeches from our webinar as well as answers to the questions asked below.
When are you transferring to the FMA and will we likely be dealing with the same people after the transfer?
We are working closely with MBIE and the FMA to discuss how the transfer will be implemented. The timeframe around this is dependent on many different things in the legislative process. Our main focus is on ensuring a seamless handover and continuity of the regulatory system.
What will be your enforcement approach once you have transferred to the FMA and what will happen to investigations that are still open once you transfer?
Following the transfer the FMA will be responsible for enforcement and that will be determined by the FMA in due course. We are engaging with the FMA around the transfer and our experience with the CCCFA. As outlined, there is still much law reform to be worked through.
How will lenders now know what to do for an affordability assessment?
While the Regulations have helped to demonstrate what responsible lending looks like, the main requirement has always been that lenders must comply with the lender responsibility principles under the CCCFA. That requirement remains and chapter 5 of the Responsible Lending Code has been revised to provide updated guidance to lenders about how they may comply with the responsible lending affordability assessment obligation.
How are your Credit staff feeling about the move to FMA?
Any type of change is unsettling for people. The Commission and the FMA are taking a people first approach to the transfer and support is being provided to our people as the work on the transfer progresses.
Do you have any visibility or statistics on the main reasons why a Lender would decline a Hardship Application?
We have limited visibility on the reasons why a lender would decline a hardship application. This information is only sporadically disclosed to us if it is mentioned in a complaint or is fully investigated. Due to the insufficient data available, we are unable to provide in-depth statistics on this issue.
