Clark's CCCFA clues
The Minister of Commerce David Clark has given some hints as to how the much criticised Credit Contracts and Consumer Finance Act might be changed - but also defended the legislation.
Thursday, February 17th 2022, 12:30PM 
2 Comments
by Eric Frykberg
The law has been widely criticised for loading expensive paperwork onto lenders and imposing prescriptive rules that prevent brokers with years of experience from applying their expertise to each particular borrower.
The law was put under review less than two months after it came into effect after a storm of protest.
Clark has now given some clues about the sort of changes that might come about when the process is done in April.
He was speaking to a conference of the Financial Services Council, and mentioned things that he doesn't like which are included in an assessment of expenses when a person is seeking a loan.
“Some of the ways in which things are counted as expenses, like savings, just don't feel right at an intuitive level to me, so I want to pick through that carefully,” Clark said.
“And I do want to make some 'no regrets' changes sooner rather than later.”
Clark went on to defend the way in which the CCCFA had been developed, despite intense criticism of that process.
“Everybody signed up to this, all the parties in parliament signed up, and supported the intent of the legislation and so did the banks.
“Everybody wants it to work, so it is important to me that it does work as intended.”
And Clark went on to suggest that some of the stories alleging borrowing difficulties for customers were not caused by the CCCFA at all.
They stemmed from people having low deposits and getting caught up in LVR restrictions imposed by the Reserve Bank.
A drop in borrowing could also stem from seasonal factors rather than the CCCFA.
“We have got to work out what is the intended effect (of the law) because any borrower can become vulnerable if their life circumstances change and they have taken on debt that is not affordable – that is the lending we want to stop.”
Financial experts spoken to after Clark's address were unsure what he meant by the term, 'no regrets'.
It could have meant that he wanted both sides to a contract to be happy when it is signed and not bring up resentments later.
On the other hand, it could mean that CCCFA changes brought in after the review are agreed on by everyone and do not lead on to further political controversy later.
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Comments from our readers
The changes to the CCCFA are plain stupid and not thought through at all David.
Take for example the quote "We have got to work out what is the intended effect (of the law) because any borrower can become vulnerable if their life circumstances change and they have taken on debt that is not affordable – that is the lending we want to stop.”
unless you haver a crystal ball and extraordinary powers how are you going to know what these circumstance changes are? divorce, death, business failure, loss of job, sickness, poor decisions i could go on, how are you going to predict these things David?
Or are going to just shut up shop and not lend to anyone.
My god, someone who has worked all their lives built up assets of $2m in their home can even borrow $50k using this stupid Law, where is the risk, stop telling people how to live their lives.
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This could almost be considered funny if it wasn't so sad. I presume then Minister that the officials at MBIE who recommended customer savings be included as expenses will be reprimanded now? Respectfully you and MBIE refused to heed the advice of seasoned practitioners who forewarned correctly that these changes if introduced would negatively borrowers - especially first home buyers. Please don't sit there now and defend the introduction of legislation which was clearly flawed. The evidence is piling up!