Govt proposes initial changes to lending requirements
Published: 11 March 2022
Initial proposed changes to lending requirements announced by the Government today will help New Zealanders acquire credit safely and responsibly.
In light of concerns raised, in January the Minister of Commerce and Consumer Affairs commissioned an investigation into the initial implementation of changes to the Credit Contracts and Consumer Finance Act (CCCFA) and regulations, which came into effect in December 2021. These changes require lenders to follow a robust process to ensure that lending is affordable and suitable, to protect borrowers from taking on debt they cannot afford to pay back.
MBIE is leading this investigation, in collaboration with members of the Council of Financial Regulators (CoFR), to consider the scale and nature of the impacts, and assess what, if any, further actions are needed.
While this investigation is still ongoing, the early indications are that the new affordability and suitability measures are having some of the impacts intended. However, a number of potential unintended consequences are also emerging.
Cabinet has agreed to initial proposals to make adjustments to the regulations and the Responsible Lending Code, which seek to address some of the concerns that have been heard in the investigation so far. This includes issues such as unnecessary inquiries by lenders into living expenses listed in bank statements.
These initial proposals are in line with the original purposes of the CCCFA and are subject to consultation with key stakeholders including lenders, financial mentors and consumer advocates.
As these initial proposals are progressed, the remainder of the investigation will continue. It is expected to conclude in April 2022.
The Terms of Reference for the investigation into the early implantation of the CCCFA is available below.
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