CCCFA enquiry might have terms of reference afterall
The enquiry into the Credit Contracts and Consumer Finance Act (CCCFA) might have terms of reference after all.
Wednesday, January 26th 2022, 10:57AM 
2 Comments
This is in contrast with a previous suggestion that terms of reference would be unnecessary.
The enquiry was ordered just under two weeks ago by the Minister of Commerce and Consumer Affairs David Clark.
This followed a storm of protest that the CCCFA was strangling borrowers and lenders in red tape.
In announcing the enquiry, Clark suggested it would be a low key affair, and this was backed up by a comment from an official in his office.
“There are no terms of reference, (the enquiry) is less formal than that,” the official said.
But this week, the Ministry of Business Innovation and Employment (MBIE) suggested that policy could change.
“MBIE officials will brief the Minister of Commerce and Consumer Affairs on the proposed scope and timeframes for the work this week,” an MBIE official said.
“Any further decision relating to the scope, timeframes and terms of reference will be made following this.”
MBIE is the organising agency for the body conducting the inquiry, the Council of Financial Regulators (COFR).
COFR is an inter-departmental organisation made up of the Reserve Bank, Treasury, the Financial Markets Authority, MBIE and the Commerce Commission.
Meanwhile the COFR enquiry was this week gradually getting started on its work with a preliminary meeting arranged between MBIE officials and representatives of the big five banks, Westpac, ANZ, BNZ, Kiwibank and ASB.
However, their smaller brethren have not yet got a look in. The Financial Services Federation represents non-bank lenders such as finance companies and building societies and it has not yet received an invitation in the mail.
If and when terms of reference are announced, more conflict is expected, since Clark is on the record as blaming the problem on banks misinterpreting the law.
The finance sector has repeatedly said the CCCFA is so prescriptive that banks couldn't misinterpret it if they tried, and a root and branch investigation is needed.
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Comments from our readers
1. would the same people who were involved in this CCCFA be appointed again?
2. if so, will they be paid? well, i think NO because that's equivalent to churning. if they're salaried, should be unpaid to rectify the problems they have caused - what we call responsibilities. same logic as if a tradesman did a bad job, he's expected to rectify it without cost.
just my thoughts.
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David Seymour is already on record as saying that he doesn't want MBIE anywhere near this enquiry into the CCCFA changes and for good reason. He understands there will be a lot of arse covering done by MBIE officials to explain to the Minister how a law change was introduced that makes banks treat all loan applicants as vulnerable borrowers but does not allow the bank any discretion to use good judgement and common sense when assessing whether the applicant can actually afford a loan!
Most alarming is the fact that MBIE have given no thought to the impact that these changes would have on middle New Zealand's ability to secure credit from a bank. This is unacceptable of a Government Ministry been funded by taxpayers and demonstrates a genuine lack of understanding by MBIE of how the banks were already lending responsibly. It smacks of a "we know best" attitude by MBIE officials.
MBIE should not be allowed to have anything to do with this enquiry.