The changes protect those most at risk from "predatory and irresponsible lending"
The New Zealand government has introduced amendments to responsible lending rules to curb any inadvertent consequences caused by the recently passed Credit Contracts and Consumer Finance Act (CCCFA), the Ministry of Commerce and Consumer Affairs has announced.
The CCCFA, which took effect in December 2021, requires lenders to follow a robust process and ensure that lending process is reasonable and appropriate. It also helps consumers to make informed choices, understand what they are agreeing to and keep track of their debts.
“The amendments we are making are informed by the feedback I received from banks, other lenders and consumers and sit comfortably within the intent of the CCCFA,” Minister of Commerce and Consumer Affairs David Clark said.
In particular, the amendments will set out that there is no longer need for an inquiry into a borrower’s current living expenses from recent bank transactions if they have already provided a detailed breakdown of future living expenses. The amendments will also provide that the requirement to obtain information in ‘sufficient detail’ only pertains to information directly provided by borrowers and not to information from bank transaction records.
Moreover, the amendments will remove regular “savings” and “investments” as instances of outgoings that lenders need to inquire into and offer alternative guidance and examples in situations when a loan is obviously affordable.
“These initial changes ensure borrower-ready Kiwis can still access credit while we continue to protect those most at risk from predatory and irresponsible lending,” Clark said.
