FSF welcomes ComCom's draft report recommendations on banking services

Report highlights "crucial role" of non-bank lenders

FSF welcomes ComCom's draft report recommendations on banking services

The Financial Services Federation (FSF) has expressed support for the Commerce Commission’s (ComCom) draft report on a market study into banking services, saying it has highlighted the “crucial role” of non-bank lenders in providing competition and innovation for Kiwi consumers.

FSF said it supports the report’s recommendations to accelerate progress on open banking and to ensure that the regulatory environment better supports competition.

The report says that New Zealand runs the risk of consumers missing out on banking services if there is no sufficient competition and disruption in the industry.

“It is vital that New Zealand’s responsible non-bank lenders are empowered to fill this gap, not incorrectly viewed as ‘lenders of last resort,’ but are recognised for their entrepreneurship, agility, innovation, the competitive edge they provide, and their contribution to the economy,”” said Lyn McMorran, executive editor of the FSF.

In a recent media release, the organisation said it particularly supports two key recommendations in the report.

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

The FSF said a level of regulation playing field for all lenders, including banks or non-banks, “is crucial to allow for competition and innovation in personal lending products.”

The FSF also said that the government’s “new vision” for the country’s financial services regulatory scene is a “good step in this direction.”

The second key recommendation from the report that the FSF supports is accelerating progress on open banking, which the organisation said will lead to a “more transparent environment” where consumers are allowed to choose or switch providers easier.

The FSF will continue to provide further consultation to ComCom prior to the release of the final report in August.

Over 1.7 million consumers choose to work with non-bank lenders represented by the FSF. The group has 97 members including UDC Finance, Avanti Finance, Toyota Finance, and credit unions and building societies.