The National, ACT and New Zealand First parties today confirmed their coalition agreements that will form the basis for a coalition of the three parties in Government.  I confirm below the policies in the agreements that impact on the financial services sector and its regulation.  There are two complementary agreements, one between National and Act and one between National and New Zealand First.

Key Policies

Three significant National Party policies that impact on the financial services sector (which I described here) appear to be confirmed in the agreements (directly or indirectly).  Those policies are:

• Allowing KiwiSaver investments to be invested via more than one KiwiSaver provider.
• Revoking most recent reforms of consumer credit law under the Credit Contracts and Consumer Finance Act (CCCFA).
• Repealing the Conduct of Financial Institutions (CoFI) law reforms that will regulate bank and insurer conduct (fully in force from 31 March 2025).

The coalition agreements confirm National’s existing policies (so that includes the three policies noted above) by reference to key National policy documents.  The agreements then set out a series of “exemptions”, which are comprised of variations to or removals of those National policies, and additional policies.  With respect to the three policies, only one is named in the agreements, being the CCCFA policy (as this overlaps with ACT policy).  There is nothing in the agreements to indicate that the other two National policies are not going to be advanced.  However, the proposal to reform the CoFI law might be captured under the requirement in the coalition agreement with ACT to “carry out regulation sector reviews”.  One of the sectors noted as being likely to be reviewed is the “finance sector”.  In each case a review would result in “an omnibus bill for regulatory reform of laws affecting the sector”.  There is nothing to suggest that the coalition partners would be bound to pass such bills into law.  It’s possible that the CoFI law may stand but with changes to introduced in the medium term via the review process.  ACT has a policy of introducing improvements to AML/CFT law so that’s likely to be covered as well.

What is very clear is that there is unlikely to be any significant extension of financial services regulation under the new coalition Government subject to the outcomes of the market study and the select committee inquiry (see below under “Other Policies”).  Current proposed reforms to insurance law are well advanced.  These may be passed but possibly with some changes to reflect the policy priorities of the coalition.

Timeframe

At this stage, it is not possible to determine exactly what will happen in those areas and when.  Given the ambitious agenda of the coalition and that those laws aren’t particularly prominent to the public, they may not be a high priority.

Minister Appointed

Andrew Bayly has been confirmed as the incoming Minister of Commerce and Consumer Affairs.  That Ministry has responsibility for the laws that govern the three National policies.  Bayly appears to have been the key driver of National’s policies in relation to KiwiSaver, CCCFA and CoFI so it’s quite possible he will push those policies forward as Minister.

CCCFA Policy

The ACT coalition agreement states that the parties will “Rewrite the Credit Contracts and Consumer Finance Act 2003 to protect vulnerable consumers without unnecessarily limiting access to credit.”  That aligns with National’s existing policy.  There is no further information but reforms will likely, at the very least, reduce the extent of financial disclosure required and/or reduce the level of verification required.  I expect that most of the comprehensive regulatory regime under CCCFA will be retained but it may possibly be considered under ACT’s regulatory review process.

Other Policies

Many other coalition policies affect businesses in various ways but there is only one other policy that specifically relates to the financial services sector and its regulation.  That is the Zealand First policy that the parties will “Establish a select committee inquiry into banking competition with broad and deep criteria to focus on competitiveness, customer services, and profitability.”  This would overlap significantly with the current Commerce Commission market study into competition in relation to personal banking services, although the focus may be a bit different.  It would seem to make sense for the market study to be completed before the select committee starts its inquiry, as the market study is likely to provide important information on potential problem areas.  This may also overlap to some degree with two agreed ACT policies.  One policy being to reform market studies law “to focus on reducing regulatory barriers to new entrants to drive competition.”  I assume that the current market study will not be impacted by that but that will be confirmed in due course.  The other policy being to carry out “regulation sector reviews”.