The government has had a third go at fixing the rules around the Credit Contracts and Consumer Finance Act (CCCFA).

The latest changes announced just before Easter weekend by Dr Duncan Webb, Minister of Commerce and Consumer Affairs, include:

• explicitly excluding discretionary expenses from affordability testing

• providing more flexibility for lenders about how certain repayments are calculated

• extending exceptions from full income and expense assessments for refinancing of existing credit contracts.

The changes still mean affordability assessments are needed for all loans.

Webb says the changes that come into force on May 4 will improve safe access to credit for Kiwis.

“Whilst not departing from the original policy aim to ensure borrowers can repay loans without hardship, this tidies up the December 2021 changes to the CCCFA and Credit Contracts and Consumer Finance regulations,” he says.

The CCCFA changes have been a thorn in the side of borrowers since they were introduced.

"EXCESSIVE’ SPENDING

Although aimed at unscrupulous lenders, banks have become embroiled in the changes to the detriment of mortgage borrowers, who have had to supply a lot more detail. Banks can be fined if they don’t elicit the extra details.

Once the changes came in, banks virtually stopped lending as they came to grips with what was required.

Many borrowers complained that banks would not give them a mortgage for “excessive” spending, such as buying Christmas presents or Lotto tickets.

The government decided some tweaks were needed, which were applied in July last year. However, most of the existing changes in the December 2021 regulations were kept in place. At the time the NZ Banking association said the July tweaks wouldn’t make much of a difference to borrowers.

VITAL FEEDBACK

Webb says the current amendments made to the final regulations were informed by feedback from lenders, financial mentors and consumer advocates after an MBIE exposure draft of the changes was released for consultation in September last year.

“This feedback was an extremely important step to ensure the workability of these final changes. It’s important that New Zealanders can access safe, responsible and affordable credit,” he says.

“I am confident we’re striking the right balance between ensuring Kiwis can access credit effectively, while also maintaining a strong level of consumer protection.”