CCCFA changes finally revealed

Preliminary changes to the Credit Contracts and Consumer Finance Act (CCCFA) have been unveiled

Preliminary changes to the Credit Contracts and Consumer Finance Act (CCCFA) have been unveiled and they are expected to come into force by July 7.

A detailed report on further changes has been completed and is on the desk of the Minister of Commerce and Consumer Affairs, David Clark and additional information is due out later today.

The CCCFA has been widely criticised for smothering the finance sector in a mountain of paperwork and depriving credit to perfectly dependable borrowers.

A review was ordered by Clark less than two months after the rules came into force.

Some initial changes were announced in early April and were then made subject to submissions by the industry and public.

Those were heard and the final version of the initial changes is now complete.

They include removing regular 'savings' and 'investments' as examples of outgoings that lenders need to inquire into when assessing the borrower's likely expenses.

They also clarify that when borrowers provide a detailed breakdown of their future living expenses, and these are benchmarked against robust statistical data, there is no need to also inquire into their current living expenses from recent bank transactions.

This is a reference to the notorious cups of latte that sometimes stood between would-be borrowers and their access to credit.

The probability of people changing their spending behaviour when they incur a big loan will in future be able to be taken into account.

The new rules will also address issues such as a ‘reasonable surplus’ or an 'obviously' affordable loan.

The Government brought in the changes because of concern about vulnerable borrowers and unscrupulous loan sharks.
But in fact, it scooped up the entire industry in its net, including financial advisers and banks, and prevented them from applying their experience and expertise to each of their clients.

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