Second tranche of CCCFA reform due out of the end of this month

The second stage of proposed changes to the Credit Contracts and Consumer Finance Act (CCCFA) is still being examined by the Minister of Commerce and Consumer Affairs, David Clark.

The document is understood to be quite long and complex and has been with Clark since the end of April.

An announcement on what to do next is expected to be made by the end of July, three months after the proposal was completed.

It will then be open to representatives of the lending industry to make submissions in response.

The CCCFA has been widely criticised for entangling the finance sector in a thicket of red tape and depriving planned-for credit from perfectly dependable borrowers.

The act was reviewed within two months after it came into effect, and a first tranche of reforms was implemented on July 7.

Those changes removed savings and investments from would-be borrowers' lists of expenses, along with cups of coffee or glasses of wine, as long as robust financial information was available from elsewhere.

These changes addressed some of the loudest complaints about the law. But they did not go nearly far enough, according to the Bankers' Association, which said they raised hopes of a solution that wasn’t delivered.

The Financial Services Federation, representing non-bank lenders, agreed, though was grateful that some changes at least were made.

Both groups will be keenly awaiting the second wave of reform.

The CCCFA was intended to protect vulnerable borrowers from being taken advantage of, but ended up scooping the entire lending industry in its net.

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