Sir John Key lambasts CCCFA

The Credit Contracts and Consumer Finance Act (CCCFA) has come in for a sound drubbing from the former Prime Minister, Sir John Key.

Monday, October 31st 2022, 7:56AM 3 Comments

by Eric Frykberg

Key, who is the chairman of ANZ, said “the CCCFA...makes it really hard for us to bank for marginalised New Zealanders.”

“What we are really doing is sending them to non-regulated or very lowly-regulated financial services.”

Key also took aim at the idea of limiting lending according to a debt-to-income ratio (DTI), which he said would cause harm for low income New Zealanders.

He suggested there was no indeed for rules like these anyway, because banks are already conservative in the amount of high LVR lending that they did.

All it did was hurt other people.

“But again, the people who really need to get into a home to do all the things they want to do, might not necessarily have the deposits and they do not have the Bank of Mum and Dad to help them.

“So I just wonder, we pile on regulation onto the banks, where it is counter productive and sending a lot of (customers) to places we can’t see.”

The CCCFA was passed into law in late 2021 and immediately provoked a storm of protest.

It was accused of smothering lenders and advisers in layers of expensive bureaucracy with few beneficial results. It was also accused of depriving perfectly solvent borrowers from loans they would otherwise qualify for.

A review of the law was ordered within two months of its being passed and two limited reforms were undertaken.

These included removing the notorious cups of latte that were added to a would-be borrower's expenses. A second tranche of reforms was later proposed but has not yet been activated.

Both tranches were condemned as inadequate by critics from across the financial sector.

Key was speaking at the Institute of Finance Professional of New Zealand (INFINZ) conference in Auckland last week.

Tags: CCCFA

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Comments from our readers

On 31 October 2022 at 4:59 pm JeffQV said:

Crippling Consumer Confidence Finance Act. Should not apply to any residential mortgages at all.

On 31 October 2022 at 5:33 pm Robo said:

Dear John, Wouldn't it be more helpful for struggling New Zealanders if your ANZ bank remitted sending it $2billion plus profits and returned , say half of this amount to those struggling New Zealanders who hold ANZ bank accounts or mortgages from which you draw your enormous profits and provide to your Australian shareholders. As a New Zealander and past Prime Minister do you retain some loyalty and care for your fellow New Zealanders?

On 1 November 2022 at 9:57 am krish@mortgagesuite.co.nz said:

Good on Sir John Key to share his thoughts. Industry experts have been complaining about CCCFA since its inception but to no avail. We (the Advisers and the lenders) have been saying for months now that it is hurting the very people it was was designed for. Not much thoughts went into it by those involved but still they dont have the decency to own up and correct it.

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