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"Urgent action is needed to clean up the unfair and unethical aspects of New Zealand's lending market", said Andrew Campbell, Finsec Campaigns Director. "Lenders have a role in acting ethically, informing customers of all their options and developing products that maximise long term financial security for customers", added Campbell.



The report recommends the establishment of a lending code and a social responsibility code to be followed by all lenders, as well as the set up of a watch dog agency which would ensure all lenders adhere to the codes.



UNI Finance supports the recommendations made by Finsec in its report as it has been calling for a high level of consumer protection at natioanl and international level. Its statement on "Demands of UNI-Europa Finance on regulation of financial markets", released in May 2008, called for statutory regulation that guarantees that any financial institituion provides its customers with qualified and proper advice based on their interests.



Finsec's report comes at a time when the level of New Zealanders household debt relative to assets and income is at an all time high. Lenders in New Zealand are largely unregulated and the growth of loan sharks is of significant concern.





Finsec's report is available here:









Summary of lending report recommendations by Finsec



Recommendation 1

An independent Financial Consumer Agency, co-funded by the industry and government, be established to oversee the workings of the financial sector.



Recommendation 2

A New Zealand Code of Lending Practice be established. The finance industry, including consumers, workers and other stakeholder representatives would all be involved in the development and establishment of the Code. Compliance with the Code would be proactively monitored and enforced by the Financial Consumer Agency.



Recommendation 3

A Code of Social Responsibility be established for the finance industry



Recommendation 4

The Financial Consumer Agency (see Recommendation 1) shall oversee the implementation of the Code of Social Responsibility.



Recommendation 5

Amend the Reserve Bank of New Zealand Act to require the Reserve Bank to license and supervise any financial institution performing financial functions that is of a size or nature that could pose a risk to soundness of the financial system.



Recommendation 6

The Reserve Bank’s supervisory arrangements be strengthened by introducing minimum liquidity requirements, targeted use of on-site assessments of banks’ risk management, governance and lending practices, and taking into account best international practice.



Recommendation 7

Amendments be made to the supervision of non-bank deposit-takers that provide for:

• An objective of transparency of risk;

• A clear set of delineated responsibilities established for the Reserve Bank, for the trustee corporations, and for the Securities Commission as co-regulators of the system;

• Requirements established on capital adequacy; lending to related parties; responsibilities and accountabilities for the board of directors; risk management systems; and liquidity;

• Strengthening of trustee-based supervision.



Recommendation 8

The Government undertake a review of the disclosure requirements of financial institutions for the purpose of improving disclosure practices.



Recommendation 9

New Zealander’s financial literacy, education, information, and counselling be improved through increased government funding to registered not-for-profit financial or budget advisory services.