LawHawk Blog

Last week, I wrote about the opportunity to create substantial savings for banks and their customers through use of common documents. Advantages would include:

• reducing the substantial costs banks incur in preparing the documents;

• reducing the costs of updating and maintaining them, and increasing the number of people with incentives to continuously  improve them;

• making it much faster, easier and cheaper for lawyers to advise clients on the terms of loan and security documents – meaning borrowers can access their money quicker, and with lower costs; and

Despite nearly 20 years working as a banking and finance lawyer, one thing I have never understood is why banks in New Zealand all have their own terms and conditions for security and loan documents. If ever there were documents that were well suited to industry standardisation, they would be it. Consistency of documentation and processes in areas where the banks do not compete – like this - would reduce transaction costs, and free them up to focus on areas where they could innovate and compete.