Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on the Government's proposed changes to consumer finance laws

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Jenee Tibshraeny: NZ Herald Wellington business editor on the Government's proposed changes to consumer finance laws · Best of Business

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  Speaker 2: News Talk ZB. It is six seventeen. The government we're
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  Speaker 2: going back to parliament weirdly now and apparently the fire
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  Speaker 2: alarm is over, but there's a party happening somewhere. The
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  Speaker 2: government is making a change to our consumer finance laws.
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  Speaker 2: This is interesting because it could actually affect a class
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  Speaker 2: action lawsuit. It could quash a huge class action lawsuit
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  Speaker 2: against a n z an ASB bank. Jenetip Training is
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  Speaker 2: the heralds Wellington Business editor with us. Hey, Jana, Hey Ryan,
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  Speaker 2: how's that? Are you near that party? Is that what
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  Speaker 2: I can hear in the background.
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  Speaker 3: I'm near the party, but I'm unfortunately not at the party.
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  Speaker 3: So if anyone hears any noise, I'm not at the party.
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  Speaker 3: I'm talking about consumer finance law instead, which is obviously
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  Speaker 3: much better.
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  Speaker 2: No wonder you're not at the party exactly. Hey, remind
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  Speaker 2: us what this lawsuit is. What's the crux of it?
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  Speaker 3: Okay, So basically, under the current law, if your bank
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  Speaker 3: or other lender gives you a loan but gives you
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  Speaker 3: the wrong information about that loan. The default position is
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  Speaker 3: you can get them to reimburse you all your interest
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  Speaker 3: costs and other costs that you've paid for the time
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  Speaker 3: that they gave you the wrong information. So that's like
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  Speaker 3: if you go and use a mortgage calculator and it
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  Speaker 3: spouts out one number, but they actually charge you another
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  Speaker 3: number in another figure. You know that that is a
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  Speaker 3: bad thing by the lender. And currently the default position
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  Speaker 3: is that you can get all your interests in other
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  Speaker 3: costs reimbursed. So there's currently a class action before the
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  Speaker 3: courts because more than one hundred and fifty thousand people
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  Speaker 3: have received the wrong information from A and Z and
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  Speaker 3: ASB in the past, and this class action is trying
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  Speaker 3: to get interest costs reimbursed for all these people. So
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  Speaker 3: it could be hundreds of millions of dollars, possibly even
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  Speaker 3: billions of dollars that these two banks have to repay
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  Speaker 3: their customers. That is currently going through the courts, But
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  Speaker 3: the government is looking to change the law in such
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  Speaker 3: a way that that court case will be affected. It's
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  Speaker 3: worried that the law is too heavy handed and that
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  Speaker 3: the penalty that these banks face is disproportionate to the
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  Speaker 3: mistake that they made.
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  Speaker 2: That's a pretty unusual call for a government to make,
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  Speaker 2: isn't it. I mean, this is a private business. They've
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  Speaker 2: made a mistake, well, potentially made a mistake. Obviously the
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  Speaker 2: courts will decide that, But why would the government want
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  Speaker 2: to get involved?
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  Speaker 3: Yeah, So, look, I think the government is worried that
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  Speaker 3: if the penalty is disproportionate, that will make lenders to
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  Speaker 3: risk averse and also add to their costs. Like if
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  Speaker 3: these banks have to pay you know, hundreds of millions
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  Speaker 3: of dollars we end up paying that they end up
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  Speaker 3: passing those costs onto their customers. The government's also worried
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  Speaker 3: that if a small lender, like a little finance company
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  Speaker 3: was hit by this, it could really cripple and make
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  Speaker 3: it harder for them to compete with the big banks.
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  Speaker 3: So basically, the one hundred and fifty thousand bank customers
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  Speaker 3: have already received some redress for the mistakes that the
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  Speaker 3: bank's made, But the issue that's kind of being debated
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  Speaker 3: now is, you know, whether they deserve to be compensated
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  Speaker 3: more for those breaches. So it is a pretty unusual
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  Speaker 3: situation for the government to change the law and make
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  Speaker 3: it apply to something in the past and not only that,
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  Speaker 3: but make it apply to something that is actually before
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  Speaker 3: the courts.
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  Speaker 2: Yeah, really interesting move, Jenat, thanks for walking us through that.
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  Speaker 2: Appreciate it. Jenae Tip training in zidherld's Wellington Business editor
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  Speaker 2: outside a party at Parliament and Wellington.
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