David Clark was speaking to lending professionals at the annual conference of the Financial Services Federation (FSF) in Auckland.
The FSF is a professional body representing over 60 non-bank lenders such as finance companies.
Speaking to his audience, Clark said the CCCFA was intended to protect vulnerable borrowers and “lenders, budget advisers and the Government were all on the same page” about this.
When the new CCCFA regulations were first passed, the industry complained of being smothered in expensive paperwork, of being forced to follow pedantic rules and being required to block credit to perfectly solvent people.
Within two months of passage of the bill, the Government was forced to review it and its impact was then softened in two tranches of reform.
That process was defended by Clark at the conference.
“I am confident that we have now hit a sweet spot,” he said.
“Overall, (the changes) aim to address ease of access to credit and reduce unnecessary enquiries, while maintaining a strong level of consumer protection.”
Clark said while the CCCFA rules had had an impact on home lending, other factors did as well, such as LVR restrictions and higher interest rates. In addition, financial mentors were now better able to report irresponsible lending and there had been an increase in referrals to the Money Talks helpline.
And there had been another benefit, Clark said.
“Lenders are further refining their processes and consumers are becoming more familiar with the new requirements.
“This can be seen through lending complaints to the banking ombudsman falling 21%.”
But Clark's comments got little support from his own host at the conference.
Lyn McMorran heads the FSF and said the changes to the CCCFA rules had not fixed the problem and the new regulations were entirely unnecessary.
“We would like to go back to the way it was, to be honest,” she said.
“We never thought there was anything wrong with the principles-based approach of the law as it was and they didn't need changing, they didn't need a whole lot of prescriptive regulation around them to ensure responsible lending.”
McMorran said she supported some aspects of the law, such as defining high-cost lending and restricting professional fees.
“Other than that we didn't think there needed to be much more done.”
The “tweaks” made to the law by Clark had not gone far enough, McMorran said. And even if consumer spending such as avocado on toast was no longer added to the list of a would-be borrower's expenses, lenders still had to ask questions about it.
“We would like to see the regulations repealed, that is what we have asked for all the way through,” McMorran said.