CCCFA enquiry might have terms of reference afterall

The enquiry into the Credit Contracts and Consumer Finance Act (CCCFA) might have terms of reference after all.

This is in contrast with a previous suggestion that terms of reference would be unnecessary.

The enquiry was ordered just under two weeks ago by the Minister of Commerce and Consumer Affairs David Clark.

This followed a storm of protest that the CCCFA was strangling borrowers and lenders in red tape.

In announcing the enquiry, Clark suggested it would be a low key affair, and this was backed up by a comment from an official in his office.

“There are no terms of reference, (the enquiry) is less formal than that,” the official said.

But this week, the Ministry of Business Innovation and Employment (MBIE) suggested that policy could change.

“MBIE officials will brief the Minister of Commerce and Consumer Affairs on the proposed scope and timeframes for the work this week,” an MBIE official said.

“Any further decision relating to the scope, timeframes and terms of reference will be made following this.”

MBIE is the organising agency for the body conducting the inquiry, the Council of Financial Regulators (COFR).

COFR is an inter-departmental organisation made up of the Reserve Bank, Treasury, the Financial Markets Authority, MBIE and the Commerce Commission.

Meanwhile the COFR enquiry was this week gradually getting started on its work with a preliminary meeting arranged between MBIE officials and representatives of the big five banks, Westpac, ANZ, BNZ, Kiwibank and ASB.

However, their smaller brethren have not yet got a look in. The Financial Services Federation represents non-bank lenders such as finance companies and building societies and it has not yet received an invitation in the mail.

If and when terms of reference are announced, more conflict is expected, since Clark is on the record as blaming the problem on banks misinterpreting the law.

The finance sector has repeatedly said the CCCFA is so prescriptive that banks couldn't misinterpret it if they tried, and a root and branch investigation is needed.

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