Heartland Bank says changes to the credit lending law are behind its move to bump up loan establishment fees for consumer and personal loans. 

The bank, which is part of NZX-listed Heartland Group Holdings, today increased its fee for setting up a direct consumer loan from $205 to $249 and via an intermediary from $92 to $136. 

For personal loans it has increased its direct establishment fee from $222 to $246 and for those who go through an intermediary from $103 to $127. 

Chris Flood, Heartland Bank chief executive, said Heartland reviewed its fees periodically to ensure they were reflective of the costs involved in establishing, managing and providing a loan. 

"In order to meet the December 1, 2021, changes to the CCCFA (Credit Contracts and Consumer Finance Act), we needed to introduce new technologies and increase people resource to process our consumer and personal loans. 

"This has resulted in the increase in establishment fees." 

Flood said its home loan establishment fees had not increased. 

The December 1 changes mean lenders have to do much more to gather and check detailed information from potential borrowers before they will give approval including documenting whether a borrower can afford to make repayments of the loan. 

The law was tightened to prevent loan sharks from being able to do business but has resulted in borrowers finding it tougher to get a loan. 

It affects all new borrowing from new mortgages to tops up, credit cards and consumer loans. 

On Monday afternoon, Commerce Minister David Clark released terms of reference for its investigation into the CCCFA. 

While New Zealand's banking sector has said the new rules mean certain customers who were previously able to borrow are now having to have applications declined due to the new rules, Clark has fired back, suggesting a drop in lending may be seasonal and it was possible banks were simply not ready for the changes. 

A review of lending in 2018 found "widespread irresponsible lending in New Zealand and that included across the banks", Clark said. 

Banks warned the changes would make lending more conservative. Almost as soon as the legislation came into force, bank customers complained they were being rejected loans due to what appeared to be minor personal spending. 

The terms of reference suggest the investigation will start reporting back to the Commerce and Consumer Affairs Minister within days, but a swift fix is unlikely. 

Headed by unnamed officials at the Ministry of Business, Innovation and Employment, the first advice will be provided by "early-mid February" with further advice expected in April.