The Government is clarifying the Consumer Credit Agreements and Finance (CCCFA) Regulations to ensure Kiwis who are willing to borrow are not unfairly penalized when applying for a loan, the Minister for Trade and Finance announced today. Consumption, David Clark.
“Earlier this year we heard stories of bank loans being turned down because people had spent money on takeaways and streaming services – that was not the purpose of the CCCFA,” David said. Clark.
“Banks, budget advisers, the opposition and the government are all on the same page when it comes to supporting the intent of the regulations – to prevent vulnerable people from ending up with unaffordable debt.
“However, it is vital that New Zealanders can maintain access to safe, responsible and affordable credit.
“While the government has made some initial changes to address the most clearly expressed concerns as soon as possible, these clarifications announced today will help banks and lenders with some of the more technical aspects of the legislation.
“The Department for Business, Innovation and Employment (MBIE) and the Board of Financial Regulators have also taken a closer look at the implementation of the CCCFA.
“Their report notes that regulation has had some impact on home lending, but other factors such as LVR restrictions, rising interest rates, inflation and a general slowdown in the housing market have also contributed. to the decline in real estate loans that has been observed.
“On the other hand, financial mentors report that they are now better able to identify and report irresponsible lending, and there has been an increase in referrals to the MoneyTalks financial helpline.
“I am also informed that lenders are still refining their processes and that consumers are becoming more familiar with the new requirements. This is seen in the 21% drop in complaints lodged with the banking ombudsman during the March quarter. 2022. Additionally, as housing market headwinds and rising interest rates mean banks have business incentives to continue de-risking their loan portfolios, we have seen bank loan assets reach $531 billion in April 2022 and quarterly bank profits hit a record $1.8 billion in the first quarter of 2022.
“Given these new clarifications, I am confident that we are striking the right balance between access to credit and maintaining a high level of consumer protection,” said David Clark.
The clarifications will be implemented by March 2023.
(With contributions from the New Zealand government press release)