CCCFA changes welcomed, but more needed

The CCCFA still requires lenders to abide by the principle that they will not lend to people who cannot afford to make the repayments without substantial hardship, and there are still substantial penalties for lenders who breach this principle, FSF executive director, Lyn McMorran says.

“Lenders still have robust responsible lending obligations, but the removal of the one-size-fits-all regulations means an ability to use expertise to make measured judgement calls on a case-by case basis, rather than treating all consumers the same.”

One thing the 2021 changes did get right was introducing a definition into the law of high-cost lending, and the parameters that were applied to high-cost loans with respect to the maximum interest and fees that could be applied to these. The FSF believes these changes have had the desired effect of limiting high-cost lending, with not a single consumer accessing a high-cost loan last year, according to a statutory review of the provisions released by MBIE in May.

But there is more work to be done to streamline New Zealand’s over-complicated financial services regulatory system, says McMorran.