CCCFA changes finally revealed

Preliminary changes to the Credit Contracts and Consumer Finance Act (CCCFA) have been unveiled

Thursday, June 9th 2022, 10:54AM 1 Comment

by Eric Frykberg

Preliminary changes to the Credit Contracts and Consumer Finance Act (CCCFA) have been unveiled and they are expected to come into force by July 7.

A detailed report on further changes has been completed and is on the desk of the Minister of Commerce and Consumer Affairs, David Clark and additional information is due out later today.

The CCCFA has been widely criticised for smothering the finance sector in a mountain of paperwork and depriving credit to perfectly dependable borrowers.

A review was ordered by Clark less than two months after the rules came into force.

Some initial changes were announced in early April and were then made subject to submissions by the industry and public.

Those were heard and the final version of the initial changes is now complete.

They include removing regular 'savings' and 'investments' as examples of outgoings that lenders need to inquire into when assessing the borrower's likely expenses.

They also clarify that when borrowers provide a detailed breakdown of their future living expenses, and these are benchmarked against robust statistical data, there is no need to also inquire into their current living expenses from recent bank transactions.

This is a reference to the notorious cups of latte that sometimes stood between would-be borrowers and their access to credit.

The probability of people changing their spending behaviour when they incur a big loan will in future be able to be taken into account.

The new rules will also address issues such as a ‘reasonable surplus’ or an 'obviously' affordable loan.

The Government brought in the changes because of concern about vulnerable borrowers and unscrupulous loan sharks.
But in fact, it scooped up the entire industry in its net, including financial advisers and banks, and prevented them from applying their experience and expertise to each of their clients.

Tags: CCCFA

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Comments from our readers

On 10 June 2022 at 4:56 pm Amused said:

If ever there was an example of regulation and compliance been a detriment to a country’s economic prosperity, it’s the changes made to the CCCFA late last year. MBIE appear to have just paid lip service to the Minister's request in February for them to review the changes that they themselves recommended. What did we really expect though from a Government Ministry that has repeatedly disregarded the opinion of industry experts? MBIE officials think that they alone know best. I just hope they take the full blame when the economy tanks because it’s obvious the country is sliding into a recession with people’s inability to borrow money from the banks now severely impacting many of our industries i.e., construction companies.

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