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CCCFA terms released; Bank bosses summoned to Beehive

The government has approved Terms of Reference for an enquiry into the  Credit Contracts and Consumer Finance Act (CCCFA), after earlier suggesting they would not be necessary.

Monday, January 31st 2022, 8:59PM 3 Comments

by Eric Frykberg

They declare the investigation will analyse the reported outcomes of the CCCFA and whether they’re attributable to the Act’s intended protections.

 They will also look at intended and unintended consequences, and consider the impact of external factors like the global economic situation.

The problem of unintended consequences are one of the main complain from people who are upset at the CCCFA, which came into effect last December.

The critics say the law was supposed to target predatory lenders but in fact throttled almost everyone in red tape.

Lenders were forced to follow prescribed paths instead of applying their expertise specifically to each borrower. 
Some would-be borrowers suddenly found they could not get the loans they were counting on and were eligible for previously, because expenditure on lattes and hamburgers were counted as part of their financial records.
A storm of protest developed as the law was implemented, and an enquiry was promised 17 days ago by the Minister of Commerce and  Consumer Affairs David Clark in response to this repeated criticism.   
His office said at the time it would be a low key affair, but it has since grown in stature, and Clark authorised Terms of Reference for the investigation over the weekend.

The enquiry is being done by the Council of Financial Regulators, which comprises organisations like Treasury, MBIE, the Financial Markets Authority and others. It has been asked for a preliminary report by mid February, with the final report due in April.

The terms of reference have just been published on the MBIE website and make clear the goal of the inquiry.

“The objective of the investigation is to identify any impacts of the recent CCCFA changes that came into force on 1 December 2021, considering the scale and nature of the impacts, to assess what, if any, further actions are needed,” the document reads.

“The scope of the investigation is to look at the intended or unintended impacts, beyond those expected by the initial implementation, of the parts of the Credit Contracts Legislation Amendment Act 2019 and Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020, that came into force on 1 December 2021.

“This is primarily in relation to mortgage, but also other lending, by banks and non-bank lenders in the current consumer credit market.”

The emergence of the terms of reference follows a meeting between MBIE  officials and representatives of the five big banks last week. 
A follow up meeting between the Minister and the heads of those banks has been requested for this week.

Read terms of reference here


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Comments from our readers

On 1 February 2022 at 3:27 pm Amused said:
The people calling the shots (MBIE) who recommended these CCCFA changes to Minister Clark have zilch experience when it comes to lending money to borrowers (academic is not counted as it's only theory) Yet these same people have now managed to dictate to all the banks in New Zealand how things should be done!

MBIE and Minister Clark constantly refused to heed the advice of seasoned practitioners (the banks) who forewarned correctly that these changes if introduced would negatively impact many borrowers. It appears that this Government thinks it knows best, for all aspects of our lives.

On 2 February 2022 at 8:53 am Tang Shing-bor said:
Waste of time. Repeal the Act and let the market do what the market does.
On 2 February 2022 at 9:09 am Amused said:
According to some of the latest REINZ stats First home buyers have been hit especially hard by lenders applying new rules contained in the Government’s CCCFA legislation. A record net 65% of responding agents have reported seeing fewer first home buyers in the market. FHB presence has collapsed from November after showing little change for virtually all of 2021.

So much for this Government saying its focus is on helping First home buyers!

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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