'Fifteen-page forms to do everyday banking? This is crazy.'

Saturday, 1 January 2022

Kiwibank’s lengthy form for lifting your credit card limit was introduced as a result of changes to lending laws.

When finance expert Christopher Walsh tried to lift the credit limit on his Kiwibank Air New Zealand Airpoints Platinum Visa credit card from $9500 to $10,000 he was sent a 15-page form to fill in.

“Fifteen-page forms for regular banking? “This is crazy,” said Walsh, who runs the MoneyHub financial research website.

Kiwibank introduced the form to comply with tough lending laws introduced on December 1, which were supposed to protect vulnerable borrowers from unscrupulous lenders.

But mortgage brokers claim the new laws have caused an artificial credit crunch because applying for loans had become a “bloody nightmare” and many people trying to buy their first homes no longer qualified for loans.

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Walsh said his experience showed it was not only bank home loans being disrupted by the law changes.

Christopher Walsh is the founder of MoneyHub on his travels. Walsh is able to run his business, which helps New Zealand consumers find the best financial services, from anywhere in the world.

The Kiwibank form required Walsh to fill out in-depth information including; his age, relationship status, whether he had dependents, whether he rented or owned, his work status, who employed him (and for how long), his income and itemised expenses, whether he had a student loan (and how much), whether he was in KiwiSaver (and how much he was contributing), whether he got benefits (and which ones), whether he got a car allowance at work, the total value of his assets, whether he had other loans (and how much they were), whether he tithed, or paid private school fees, and why he wanted the extra credit.

Walsh wasn’t applying for a dangerous level of credit.

He said he only tinkered with his credit limit to see how Kiwibank had responded to the December 1 changes to the Credit Contract and Consumer Finance Act (CCCFA).

“I dropped the limit to $9500 to increase it back to $10,000, computer says, ‘No, fill out this form’,” he said.

“So I then dropped it from $9500 to $9000, and tried to move it back to $9500. No, form must be filled out. I've had this card since 2014. Never missed payment. But the computer says, ‘no’.”

“It's laughable,” he said.

A Kiwibank spokeswoman said: “We know this new process is more intense, and we’re doing our best to reduce the impact for our customers.”

She said: “Like all lenders, Kiwibank is required to comply with the CCCFA and its regulations.”

John Bolton, the frustrated chief executive of mortgage advisory company Squirrel, has started a petition to rewrite lending laws he says will make it harder for ordinary couples to buy homes and will increase the cost of getting loans.

“Recent changes require us to collect more information and make specific inquiries to determine whether lending is both suitable and affordable,” she said.

The law applied both to new loans, and changes to existing loans, she said.

“Whether you’re borrowing to buy a dishwasher, upgrading your car on finance, getting a home loan, or as in this case, extending your credit card limit, these new rules apply,” she said.

Feedback from customers had already resulted in Kiwibank changing the form to make it clearer and easier for customers to understand and complete, she said.

Mortgage broker John Bolton is campaigning to get home loans excluded from the new laws.

He’s been gathering signatures on a petition to have home loans exempted from the new laws, which had resulted in “an unfathomable increase in bureaucracy and a high cost with no tangible benefit to society”.

Bolton plans to lobby Parliament early this year, but Walsh would like to see more than just home loans exempted.

“John Bolton is 100 per cent right with mortgages,” Walsh said. “Now, let's take it to non-risky credit card customers.”

Walsh said he had operated his accounts with Kiwibank with care and diligence for years, never paid a cent in interest, and did not need protecting.

“I’m not a victim of payday lending, or oppressive interest rates,” he said.

Walsh said Kiwibank was not alone in having introduced intrusive forms for modest credit limit changes.

“Reddit is alive with complaints about people being rejected for minor balance movements. It's if the banks have stopped making any automatic decisions,” he said.

Banks had not communicated to their customers the things they would require after December 1, Walsh said.

He called on banks to invest more in systems, so they could automate decision-making for long-term customers they should know were at low risk of defaulting on loans.

“Get the systems going here. Know your customers, people,” he said.