Can NZ First’s woke banking bill recover from humiliating criticism?

Friday, 12 September 2025

ANALYSIS: Coercive. Draconian. Ambiguous. NZ First’s woke banking bill drew criticism, and even laughter, at a hearing of the Finance and Expenditure Select Committee.

Committee chair Cameron Brewer acknowledged critics’ claim that “you could drive a truck through” through the bill’s ambiguous drafting.

A few minutes later, when NZ First MP Andy Foster was struggling under questioning, Brewer acknowledged the happy laughter from Banking Association representatives, who opposed the bill.

“It’s a pity we haven’t got a camera on the Banking Association,” Brewer said. “Its face at the moment!”

The Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill is designed to prevent banks from debanking the likes of petrol stations, coal miners and farmers for environmental reasons on pain of a $500,000 fine, and even the imprisonment of company directors.

The bill would place a new duty on financial institutions to provide financial services to customers, except for “valid and verifiable commercial grounds”.

A valid reason, according to the bill, did not include “murky ‘environmental, social or governance’ moralising”.

The bill, which has got insurers as well as banks worried, grew out of Resources Minister Shane Jones’ frustration at banks’ reluctance to lend to coal miners and petrol stations, two fossil fuel industries New Zealand continues to rely on to get food into supermarkets, people to work, and, as Foster put it: “because otherwise the lights are going to go out.”

The woke banking bill won support not only from those sectors but also Federated Farmers, which was concerned about banks’ efforts to reduce the emissions footprints of their lending.

Jones said it was not the business of banks to impose a “moral order on New Zealand”.

If an activity was legal ‒ be it coal mining, operating a brothel, making higher-interest loans to desperate borrowers, or running a fringe religious group ‒ banks should provide banking services like loans, unless they had a valid, commercial reason not to, the reasoning went.

And there was the rub with the bill, which was tabled as a members’ bill in Foster’s name, leaving it as the former Wellington mayor’s job to defend it.

By law, the directors of banks and insurers must act in good faith and in what they believe to be the best interests of the company. Surely then, the committee heard, everything they choose to do is done for valid commercial reasons.

Roger Beaumont, chief executive of the Banking Association, told the committee: “This bill is based on a serious misunderstanding. It ignores the fact that banks make credit decisions based on commercial reasons, not on the basis of murky moralising.”

And while National, and ACT supported the bill to the select committee, seeing real issues to be debated, their MPs on the select committee hearing on Wednesday weren’t jumping in with positive comments when Foster’s bill was being ripped into.

It wasn’t just the drafting of the bill that came under fire.

Scornful senior Labour MPs Deborah Russell and Megan Woods were incredulous that Foster thought it was Parliament’s job to interfere with private companies’ freedom to decide who to enter contracts with.

Representatives from Parliament’s Legislation Design and Advisory Committee, which is tasked by cabinet to advise on the workability of proposed laws, said the bill should not proceed because it was draconian and unlikely to achieve its objective.

Simon Peart, a partner from Chapman Tripp and a member of the advisory committee, described the bill as “coercive”.

He said the bill was draconian because it threatened the likes of bank directors with imprisonment for exercising commercial judgment.

National MP Dan Bidois asked Foster: “Virtually every submitter from the industry has said that this bill is likely to create bureaucracy. I'm just wondering what you would say to that.”

The heart of this criticism was that loans could become more expensive and take longer to get if the bill became law, partly because banks would fear re-runs of the Gloriavale versus BNZ case, which followed the bank’s decision to debank the reclusive religious group.

Foster fluffed his lines by recalling previous laws, including money laundering laws, that had resulted in banks creating what he called “the most monumental and horrendous bureaucracy”.

“Maybe they should think about doing it better,” Foster said.

It was at this point that the Banking Association representatives’ glee was noticed by Brewer.

It wasn’t the only moment in the hearing that Foster struggled to defend the bill against criticism.

The premise that banks should not take environmental factors into account was brought into sharp focus when Simon Upton, Parliamentary Commissioner for the Environment, tore into the bill.

Foster had accused the last Labour-Green government of “terminating” certain industries ‒ a reference to its ban on exploration for new oil and gas resources.

Instead of bolstering the case for the bill, Foster’s example illustrated just how risky it could be for banks to lend to companies whose businesses might face the disfavour of a future government.

“Why should they [lenders] not be able to take account of the policy and regulatory risks that flow from changing governments?” Upton asked.

“Environmental risks are just that. They are risks, not moralising. Environmental risks entail valid reasons for lenders to decline to lend,” Upton said.

Upton called for the bill to be withdrawn, saying it flew “180 degrees against your own advice as a committee”.

He was referring the the committee’s report on climate adaptation last year.

In that report, the committee expressly called for the likes of banks and insurers to send market signals to ensure people and businesses took action to better prepare the country for climate change.

These market signals included banks’ willingness to lend on properties at risk of flooding and coastal inundation, and insurers charging higher premiums to insure homes at higher risk of increasingly frequent flooding events.

Upton said Foster’s bill sought to ban banks, and insurers, from treating any consumer less favourably because of any “direct or indirect environmental, social, or governance consideration”.

“You are effectively saying that people should be shielded from the consequences of risks, and that they will have to be picked up by society … ultimately picked up by taxpayers,” Upton said.