Government changes responsible lending rules to address CCCFA issues

The following statement was released by the Minister for Trade and Consumer Affairs, David Clark, early Friday morning.

Update to responsible lending rules follows criticism amendments to the law on credit agreements and consumer credit no later than December 1 of last year.

Government updates responsible lending rules

·Clarify that when borrowers provide a detailed breakdown of future living expenses, there is no need to learn current living expenses from recent banking transactions.

·Removed regular “savings” and “investments” as examples of expenses lenders should ask about

·Clarify that the obligation to obtain “sufficiently detailed” information only concerns information provided directly by borrowers rather than information from bank transaction records.

·Provide alternative advice and examples when it is “obvious” that a loan is affordable

The government is making practical changes to responsible lending rules to limit unintended consequences caused by the Consumer Credit Agreements and Finance Act (CCCFA), Minister of Commerce and Consumer Affairs, David Clark.

The law, which came into force on December 1, 2021, requires lenders to follow a rigorous process and ensure loans are affordable and suitable.

“The changes we are making are informed by feedback I have received from banks, other lenders and consumers and fit comfortably within the spirit of the law,” David Clark said.

“These initial changes ensure Kiwis ready to borrow can still access credit as we continue to protect those most at risk from predatory and irresponsible lending.

“There is no doubt that banks, budget advisers and the government are all on the same page when it comes to supporting the intent of the law – we want to prevent vulnerable people from ending up with unaffordable debt. .

“Following my meetings with banks late last month to hear their concerns, I detected little enthusiasm for massive changes to the law, but rather a preference for some practical changes to be made to ensure that the objectives of the legislation are better achieved.

“In the meantime, a wider investigation, led by the MBIE and the Board of Financial Regulators, into the rapid implementation of the CCCFA changes is underway.

“So far, investigations have found no reason to believe that the CCCFA is the main driver of the loan cuts. The Reserve Bank’s December figures highlight seasonal variations as a major contributor. fact, December 2021 was still above the trends of the same month in 2017, 2018 and 2019.

“It is also important to note that banks may be managing their lending more conservatively and this is likely due to global economic conditions. And that a number of factors affecting the market have occurred concurrently with the changes in the CCCFA, including increases in OCR, changes in LVR, and an increase in housing prices and local government tariffs.

“It should be emphasized that today’s changes are not the final word and any further changes to credit laws and the Responsible Lending Code will be considered part of the rest of the investigation which is due to take place on next month,” said David Clark.


  • The initial proposed changes to the regulations and the Responsible Lending Code, approved by Cabinet, are as follows:
    • Removed regular “savings” and “investments” as examples of expenses lenders should inquire about when assessing the borrower’s future expenses.
    • Clarifying that when borrowers provide a detailed breakdown of their future living expenses, and these are compared to sound statistical data, there is no need to also inquire about their current living expenses from transactions recent banking.
    • Clarifying that when lenders choose to estimate future expenses from records of recent bank transactions, they are allowed to obtain information on how their current expenses are likely to change once the contract is concluded.
    • Clarify that the requirement to obtain “sufficiently detailed” information only relates to information provided directly by borrowers (for example, ensuring that expenditure categories on application forms are sufficiently detailed) rather than information from borrowers. bank transaction records.
    • Provide further guidance on when a lender should allow a “reasonable excess” (the amount left when the borrower’s estimated expenses are subtracted from their income) and how lenders should set requirements for surplus.
    • Provide alternative advice and examples where it is “obvious” that a loan is affordable, so that a full assessment of income and expenses is not required.
  • MBIE will engage with and consult with key stakeholders on these initial proposals.

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