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Source: New Zealand Government

  • Narrowing the expenses considered by lenders
  • Relaxing the assumptions that lenders were required to make about credit cards and buy-now pay-later schemes.
  • Helping make debt refinancing or debt consolidation more accessible if appropriate for borrowers

The Government is clarifying the Credit Contracts and Consumer Finance (CCCFA) Regulations, to ensure borrow-ready kiwis aren’t being unfairly penalised when applying for a loan, Minister of Commerce and Consumer Affairs, David Clark announced today.

“Earlier this year we heard stories about bank loans being declined because people had spent money on takeaways and streaming services – this was not the purpose of the CCCFA,” David Clark said.

“The banks, budget advisers, the opposition and the Government are all on the same page when it comes to supporting the intention of the regulations – stopping vulnerable people from finding themselves with unaffordable debt. 

“It is, however, vital New Zealanders can maintain access to safe, responsible and affordable credit.

“Whilst the Government made some initial changes to address the most clearly articulated concerns in the shortest timeframe, these clarifications announced today will assist banks and lenders with some of the more technical aspects of the legislation.

“The Ministry of Business, Innovation and Employment (MBIE) and The Council of Financial Regulators have also taken a closer look at the implementation of the CCCFA.

“Their report notes the regulations had some impact on home lending, but other factors such as LVR restrictions, increased interest rates, inflation and a general property market slowdown also contributed to the declines in home lending that have been seen.

“On the other hand, financial mentors are reporting they are now better able to identify and report irresponsible lending, and there has been an increase in referrals to financial helpline MoneyTalks.

“I’m also advised lenders are further refining their processes and consumers are becoming more familiar with the new requirements. This can be seen through lending complaints to the Banking Ombudsman falling 21% in the March 2022 quarter. In addition, while the housing market headwinds and rising interest rates mean that banks have commercial incentives to continue de-risking their loan books, we have seen bank loan assets grow to $531 billion in April 2022 and bank quarterly profits reaching a record $1.8 billion in the first quarter of 2022.

“Taking into consideration these new clarifications, I am confident we are striking the right balance between access to lending and maintaining a strong level of consumer protection,” David Clark said. 

The clarifications will be implemented by March 2023.