A prominent lawyer has called for a formal investigation into the processes followed by the Ministry of Business, Innovation and Employment (MBIE) regarding a significant banking class action. Rachael Reed, KC, representing plaintiffs in the case, raised concerns about potential failures in civil service procedures and the representation of key financial risk assessments to Parliament.

In a letter addressed to Public Service Commissioner Sir Brian Roche and Attorney-General Judith Collins, Reed highlighted issues surrounding a risk assessment by the Reserve Bank of New Zealand. The assessment suggested a potential risk of $12.9 billion to the banking sector if no changes were made to the Credit Contracts and Consumer Finance Act (CCCFA). This assessment is critical as it underpins the proposed CCCFA Amendment Bill, currently under review by the Finance and Expenditure Committee.

The bill includes provisions that would allow courts to determine compensation for lenders regarding historical breaches of disclosure from 2015 to 2019, instead of mandating full repayment of interest and fees. Reed criticized the Reserve Bank’s modeling, stating that it relies on unrealistic scenarios and appears to lack mathematical validity. She pointed out that major banks, including ANZ and ASB, have dismissed settlement offers of $300 million as excessive, which raises questions about the validity of the claimed exposure of $12.9 billion.

Reed expressed concern that some members of the committee accepted this figure without adequate scrutiny. She emphasized the need for an investigation to assess whether MBIE officials adhered to established standards of policy advice, consultation, and transparency in their dealings with the Reserve Bank’s scenarios. Furthermore, she called for an examination of whether the analysis justified the retrospective legislation affecting numerous consumers and specifically targeting the class action against ANZ and ASB.

She stated to Collins: “Retrospective legislation is an extraordinary use of extraordinary power that inherently undermines the rule of law. It should only be used where the foundation is transparently justified and unassailable.” Reed argued that the evidence indicates MBIE officials failed to provide a robust foundation for their claims, relying instead on incomplete and flawed analysis.

“The depth of these process failures impacts democratic decision-making and the legal rights of tens of thousands of New Zealanders,” she added, urging immediate attention to uphold the country’s constitutional standards.

In response, Andrew Hume, general manager of commerce, consumer and business policy at MBIE, stated that the ministry is confident in the quality of the advice provided on the retrospective changes. He noted that while MBIE was not initially considering retrospective change during public consultations in 2024, concerns raised about historical breaches warranted further investigation.

Hume acknowledged that the ministry’s consultation was limited by commercial sensitivities and ongoing litigation. “Final decisions were made by Ministers and Cabinet. The bill is currently before the Select Committee for consideration,” he concluded.

As the situation unfolds, the implications of these discussions may significantly affect not only the banking sector but also the legal landscape for consumers in New Zealand.

The ongoing negotiations for a trade deal between the European Union (EU) and the United States (US) appear to favor the US significantly, leaving the EU in a vulnerable position. Recent analyses indicate that the terms of the proposed agreement represent a substantial concession from EU leaders. While the specifics of the deal have not been publicly disclosed, it is widely regarded as a major win for the US.

Donald Trump, the former President of the United States, is scheduled to meet with Sir Keir Starmer, the Prime Minister of the United Kingdom, to discuss the implications of this trade deal further. This meeting, which underscores the ongoing strategic dialogues between the US and UK, is anticipated to take place in the coming days, although the exact date remains unspecified.

Implications of the US-EU Trade Deal

The analysis of the trade negotiations has raised concerns among EU officials about the potential consequences of the deal. Experts suggest that the EU may be capitulating to pressures from the US, which could undermine its bargaining power in future negotiations. The lack of transparency surrounding the deal has sparked debates about the motivations behind the EU’s current stance.

Gavin Grey, a UK correspondent, has closely followed these developments and provided insights into the broader implications for international trade relations. According to Grey, the terms being negotiated may have long-lasting effects on both economies and could reshape the landscape of transatlantic trade.

The EU’s current position is particularly precarious as it grapples with various economic challenges, including inflation and energy dependence. Many analysts believe that the EU may need to reconsider its strategy to ensure it remains a competitive player on the global stage.

The Road Ahead

As the discussions progress, it remains crucial for EU leaders to assess the potential risks associated with this trade deal. Should the terms heavily favor the US, it could lead to a shift in economic dynamics, impacting not only trade but also diplomatic relationships.

The upcoming meeting between Trump and Starmer is expected to clarify the UK’s role in this evolving scenario, with both leaders likely discussing how the trade deal could affect their respective nations. The outcome of these negotiations will be closely monitored, as they could have far-reaching implications for future trade agreements and global economic stability.

As the situation develops, stakeholders in both the US and EU will be watching closely to see how this trade deal unfolds and what it means for their economic futures.

The Government of New Zealand has announced the elimination of card surcharges at the point of sale, a move expected to save consumers approximately $150 million annually. Commerce and Consumer Affairs Minister Scott Simpson confirmed that the ban will include additional fees associated with in-store credit and debit card transactions, such as paywave fees.

Simpson emphasized the need for pricing transparency in a competitive market. “Surcharges are annoying, they’re pesky and most customers don’t actually know whether they’re paying the full price,” he stated. This regulatory change aims to enhance consumer experience by ensuring that the prices displayed reflect the actual amounts customers will pay.

The decision follows extensive discussions among stakeholders in the retail sector, who recognized the burden these surcharges placed on shoppers. Many consumers expressed frustration over hidden fees that made it difficult to understand the total cost of their purchases. By removing these surcharges, the Government intends to foster a more straightforward and fair shopping environment.

Consumer Impact and Business Adaptation

With this new regulation, businesses will need to adapt their pricing strategies. The Government believes that removing surcharges will not only benefit consumers but also encourage businesses to compete more effectively on price. The hope is that this move will lead to a reduction in overall prices, enhancing affordability for New Zealanders.

Retailers will have to absorb the costs previously passed on to consumers through surcharges. This adjustment may prompt some businesses to reevaluate their pricing models and operational strategies to maintain profitability while complying with the new law. The Government is confident that, in the long run, this will lead to a healthier market where fair pricing prevails.

Simpson’s announcement marks a significant step towards consumer rights advocacy in New Zealand. By taking a firm stance against card surcharges, the Government is reinforcing its commitment to protecting consumers from unexpected fees and promoting transparency within the marketplace.

As this law takes effect in March 2024, Kiwis can look forward to a more transparent shopping experience, free from the frustrations of hidden surcharges. The Government’s proactive approach to this issue reflects a growing recognition of the need for consumer protection in an increasingly complex retail landscape.

Employment data released by Stats NZ indicates a significant decline in job opportunities within the construction and manufacturing sectors, with a total loss of more than 18,000 filled jobs over the past year. This downturn has particularly impacted younger workers, with the number of employed individuals aged 15 to 19 years decreasing by 10% compared to the previous year.

According to Michael Gordon, a senior economist at Westpac, these trends reflect a stark shift in the economy since the tight labour market experienced two or three years ago. Gordon emphasized that for many young workers, the principle of “last in, first out” appears to be in effect, making it increasingly difficult for them to return to employment once they have been out of work.

The decline in filled jobs highlights the challenges facing the New Zealand economy as it adjusts to changing labour market conditions. The construction sector has been particularly hard hit, losing a substantial number of jobs that were previously filled. This has raised concerns about the long-term implications for both economic growth and youth employment.

As the economy continues to evolve, the resilience of younger workers is being tested. Many are finding it challenging to secure new positions as the job market becomes more competitive. Gordon’s insights shed light on the pressing need for support systems to aid young individuals in their job search and ensure they have the necessary skills to meet the demands of a shifting economy.

The latest employment indicators serve as a crucial reminder of the ongoing impacts of economic fluctuations. With the labour market in a state of transition, there is an urgent need for targeted policies that address the rising unemployment rates among youth and support sectors that are struggling to recover from recent downturns.