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Bank chief lays out CCCFA changes that are needed

ASB chief executive Vittoria Shortt details how the CCCFA laws should be changed.

Thursday, February 10th 2022, 4:19PM 5 Comments

ASB chief executive Vittoria Shortt thinks the current enquiry into the Credit Contracts and Consumer Finance Act (CCCFA) might bring good results.

Vittoria Shortt was speaking in an interview with TMMOnline after the ASB's latest six monthly result.

During the interview, Shortt moved on from numbers to discuss the elephant in many people's rooms, the CCCFA, saying she “fully supported” the intent of the act.

“But the reality is that the changes are very prescriptive, so while we might want to apply the intent, we have to apply the letter of the law.

“When we do that, we are seeing an impact of around 7% of customers that we would have liked to lend to, but have not been able to, given these changes.”

Shortt said losing 7% of customers had not been quantified in dollar terms, but the message was still clear that the law had to be amended.

And she was quietly confident that that would happen. Changes could be made to support the intent of the law, without its unintended consequences. There were two alterations she really wanted to see.

“The first one is that there is a lot of prescription around discretionary spending … but when people get into financial hardship, we know that they change their spending. This factor is not adequately dealt with at the moment.

“The second thing is that we have to ask the same question - and verify it – whether it is for a $1000 credit card or a $1 million home loan.

“We just don't think the same level of questioning and verification is required.

“We also can't take into account what we know about our customers. We could have had a customer for 30 years, and they are a great customer and we know them really well, but we can't take that information into account.

“It's the same process whether you are a brand new customer for us or a long term customer.”

Despite these worries, Shortt was confident that real change was possible.

“The facts that the review has been set up so quickly, that the scope of the review is so broad, that the time frames are tight, suggest a serious intent for change.”

Tags: ASB CCCFA

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Comments from our readers

On 11 February 2022 at 10:49 am JeffQV said:
CCCFA has no place in mortgage lending, there are enough checks and balances in place already. Simple fix but Clark won't see that.
On 11 February 2022 at 10:55 am Veteran Charles said:
This is very interesting indeed. So well-expressed by the ASB CEO, with so much courtesy and scholarship. It is a feel-good moment for me reading that.
On 11 February 2022 at 7:04 pm financial adviser said:
It is a bit depressing when you think of the unknown amount of dollars the tax payer has paid for this legislation to be put in place (no one will ever truly know for sure how much it cost to be put in place) and no one is really accountable for the outcome. It is good news for the big law firms the Government uses I guess.
On 12 February 2022 at 6:36 am Murray Weatherston said:
Tinkering with a dog's breakfast still results in a different dogs breakfast.
The CCCFA rules need revolutionary change, But they probably won't get it because politicians and officials don't usually see things that way until it's their idea!
On 12 February 2022 at 1:43 pm w k said:
@financial adviser: good news not only for the big law firms, for the printers as well. whenever the bureaucrats decided to make a change, how many brochures, application forms, disclosure statements, etc, have to be disposed and re-printed.

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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 ▼5.79 6.15
TSB Special 4.79 4.34 ▼4.99 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: 19 May 2022 10:42am

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