CCCFA changes must go further – Bankers Association

The Bankers Association welcomes changes announced last week to the Credit Agreements and Consumer Credit Act (CCCCA), but says they do not go far enough.

Monday, March 14, 2022, 11:25 a.m.

by Eric Frykberg

“It’s not clear that they’re moving the dial enough to make a difference,” according to the association’s chief executive, Roger Beaumont.

The changes were announced after a storm of protests that a law intended to protect the vulnerable ended up penalizing almost everyone.

They included the removal of regular “savings” and “investments” from the spending of potential borrowers which was measured against their intended loan.

They also reduced the need for lenders to comb through the bank statements of all borrowers – an apparent reference to the famous cups of latte that added to a person’s expenses.

The changes came in part thanks to a review of CCCFA rules by MBIE officials on behalf of the Council of Financial Regulators, and are not the final word, according to Commerce and Consumer Affairs Minister David Clark.

The Bankers Association is pinning its hopes on this suggestion of potential further progress.

“We are pleased to see the government act quickly in response to consumer concerns about the impact of the new lending rules,” Beaumont said.

“And we welcome the Minister’s commitment to the ongoing investigation into how the new rules are proceeding.

“We think they’ve identified some of the key pain points for consumers. But it’s not clear that the changes will move the dial enough to make a difference.

“More could be done to reduce the impact on most consumers while maintaining protection for vulnerable consumers. »

Beaumont went on to support the principle of allowing credit to consumers who can afford it, while protecting vulnerable consumers from high-cost borrowing.

But the latest changes maintained the one-size-fits-all approach that hadn’t worked until now.

“More details are needed to see how the changes will actually work,” he said.

“For example, the range of benchmark expenses is very limited and regulations still require lenders to collect detailed expense information.”

He looks forward to working with officials to help develop solutions and stressed that banks take their responsible lending obligations very seriously.

The Bankers Association represents 18 banks, including all major commercial banks.

The non-banking sector has already expressed its reservations.

“There are no details as to when it will come into effect,” said Lyn McMorran of the Financial Services Federation.

“Is it immediate, is it today? The minister’s office didn’t send me anything, we were kept completely in the dark. They have sent information to the media, could they send it to the lenders please? »

Financial Advice NZ has welcomed the changes and wants them to be implemented quickly.

It is important that the Minister acts quickly to implement the changes so that Kiwis who truly have the capacity to manage credit can access it,” said its chief executive Katrina Shanks.

“We also eagerly await the outcome of the minister’s ongoing investigation.”


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