Dealers stuck with ‘bad’ rules
The Financial Services Federation (FSF) is lamenting that car dealers and finance companies will have been stuck with unwieldy lending laws for more than seven months before any changes are made to the regulations.
It follows loan approval rates falling sharply after major updates were introduced to the CCCFA from December 1, 2021, that required lenders to put extra scrutiny on consumers’ spending habits.
Lyn McMorran, the FSF’s executive director, says while the latest guidance and clarifications from the Ministry of Business, Innovation and Employment (MBIE) appear to be helpful, there is still frustration in the industry.
“For now, our members have to continue to ask invasive questions because that’s what the law says,” she told Autofile Online.
“The process is as bad as it was as of December 1. The situation hasn’t changed at all and we’re now six months further down the track.
“A lender can’t do anything different even though changes have been signalled because those changes have not taken effect yet and they could be in breach of the law as it currently stands if they don’t follow the rules.”
McMorran, pictured, notes the initial changes announced by David Clark, Minister of Commerce and Consumer Affairs, in March were meant to be introduced on June 3 but have been pushed back a month.
MBIE released an exposure draft of the regulations and the responsible lending code changes for consultation in April.
“MBIE has said the changes announced in March require a 28-day period of consultation,” says McMorran.
“I do not know when that was supposed to start because we provided feedback in April, so I do not know why a further 28-day consultation period is required now.
“They must have always known that was part of the process so why tell us June 3 as the date for changes if it was obviously not going to happen until July.”
Meanwhile, the FSF is waiting to see what further suggestions come out of an investigation by MBIE and the Council of Financial Regulators into the impacts of the CCCFA changes that came into force in December.
Clark was provided with the final report and advice from officials at the end of April. MBIE says the minister is due to make decisions on any further adjustments to lending laws by the end of July, with the report due to be published in the same timeframe.
McMorran adds: “We have been kept completely in the dark as to the contents of the full review report. We’re not expecting major changes because the minister would have to admit he got it badly wrong in the first place.
“Clearly the government has identified there’s a problem [with the CCCFA] because otherwise they wouldn’t have done a review.”
