The Commerce Commission has released the findings of its review into Motor Vehicle finance and add-on insurance.
This review, which began 18 months ago, was sparked as a way for the Commerce Commission to better understand credit-related insurance products and the way they are sold in New Zealand.
The Financial Services Federation (FSF), which represents responsible finance, leasing and credit-related insurance providers operating in New Zealand, is pleased the report did not find any systemic issues with the way in which these products are sold here. This is in contrast to the problems identified with the sale of add-on insurances by the Royal Commission report into financial services in Australia.
Fourteen out of the fifteen finance companies the Commission spoke to are members of the FSF, all of which adhere to the FSF’s Responsible Credit-Related Insurance Code.
“We acknowledge and support the Commerce Commission’s endeavours to have a better understanding of the industry. We expected the report to show that the problems identified in Australia and elsewhere are not happening here and are pleased it indicates these products are being sold responsibly in New Zealand,” says Lyn McMorran, Executive Director of the FSF.
“Responsibly sold credit-related insurance is an important part of responsible lending and is there to protect the asset or the repayment stream for consumers should something go wrong in their lives.
“Research for the report was gathered over 18 months ago and members are on a constant journey to improve their processes and systems so it is likely that if the same data was gathered now, it would identify even less to be concerned about.
“Since the review started there has also been further tightening of New Zealand’s lending law, the CCCFA, the changes to which come into effect on 1 December 2021”.
“Our members are supportive of the changes which will provide more consistency across the sector.”