The CCCFA is set to undergo a series of changes governing consumer lenders and the directors of those companies.
New rules on borrower suitability and affordability will hit brokers and their clients directly, and are expected to make lenders adopt stricter affordability criteria.
From October, lenders will be under a more prescriptive regulatory regime, and will be required to place more scrutiny than ever on borrower affordability.
The regulations will set out an express list of enquiries to establish that a loan is suitable for a borrower.
They will also outline requirements for lenders to estimate borrowers' income and expenses, and verify expenses, to ensure borrowers can afford repayments.
The rules will force borrowers to provide more granular details and evidence around their spending as they apply for loans.
According to Kate Lane, a partner at MinterEllisonRuddWatts, the CCCFA changes will "set a base line as to what analysis lenders must do in relation to suitability and affordability".
She adds: "As the regulations basically take a one-size-fits-all approach, potential borrowers who are non-standard might find that they fall in the too-hard basket for some lenders given the detailed verification work required on income and expense information."
Lane says the regulation will prescribe that expense information is verified against reliable evidence, a process likely to be "very time consuming".
Lenders have already begun to adjust their processes, and the effect of the incoming CCCFA changes have been felt in the mortgage market.
According to independent economist Tony Alexander's latest market report, banks have begun to pay more attention to the short-term debt of borrowers, particularly first home buyers.
Alexander said lenders were monitoring debt and purchases on pay-later services such as Afterpay.
"There is a general tightening of criteria as banks get ready for the new Credit Contracts and Consumer Finance Act (CCCFA) changes," he said. "This legislation requires lenders to be certain the borrower fully understands what they are signing up to."
For further details on the legislation and the new rules on borrower expenses, click here.
