Summary: Findings from the review of the December 2021 credit law changes

During early 2022, the Ministry of Business, Innovation and Employment, in collaboration with the Council of Financial Regulators, investigated whether the 1 December 2021 changes to the Credit Contracts and Consumer Finance Act (CCCFA) were having unintended impacts.

The Minister of Commerce and Consumer Affairs received a final report and advice from officials in April 2022.

The findings from the investigation include:

  • The CCCFA changes contributed to a drop in lending activity across a range of consumer credit products. The impact on home lending was found to be medium, with other factors such as LVR restrictions, increased interest rates, inflation and a general property market slowdown contributing to the declines in home lending that have been seen.
  • While the CCCFA changes from 1 December 2021 are having some of the impacts intended, some unintended impacts also emerged. This includes more borrowers across all lending types, who should pass the affordability test, being subject to declines or reductions in credit amount. Further, borrowers were being subject to unnecessary or disproportionate inquiries seen by them as intrusive.
  • These impacts are the result of more restrictive and onerous lending practices than expected following the CCCFA changes in December 2021. This came about for several reasons, including the drafting of specific parts of the Regulations, combined with interpretational difficulties, and lenders taking a conservative approach given the CCCFA’s strong liability regime. The prescriptive nature of the CCCFA changes and their application to almost all consumer lending also means that lending was impacted outside of high-risk lending.

You can read the final investigation report at: