Minister keeps lenders waiting

The Financial Services Federation (FSF) is frustrated at an apparent lack of urgency from the government about adjusting lending laws to avoid the “unintended consequences” of an earlier refresh of regulations.

A number of amendments to responsible lending rules were announced in March by David Clark, Minister of Commerce and Consumer Affairs. The move came after loan approvals sharply dropped in the wake of controversial updates to the Credit Contracts and Consumer Finance Act (CCCFA) in December.

The minister’s proposed changes include clarifying when lenders need to inquire in greater detail about a consumer’s expenses and are expected to be implemented in June.

However, an analysis by the Ministry of Business, Innovation and Employment (MBIE) and the Council of Financial Regulators into the December adjustments has yet to be made public.

Clark may make further recommendations to Cabinet about credit laws as a result of the investigation, the results of which were handed to the minister last month.

He told Autofile Online: “I’ve received the final report from officials and the Council of Financial Regulators … I am now considering the advice and decisions on government’s next steps will be made this quarter.”

The FSF has been eagerly awaiting the outcome of the analysis but Lyn McMorran, executive director, doesn’t expect any decisions arising from that to impact the rollout of Clark’s other plans to adjust the CCCFA.

“I don’t think that will delay implementation of the ‘tweaks’ already announced on a ‘no regrets’ basis a few weeks ago, which are supposed to be implemented by June 3, she told Autofile Online. 

“The question is what else the report recommends and what does the minister intend to do about it?

“It seems we won’t know any more detail about that until the government makes decisions based on the minister’s recommendations later this quarter, which takes us to the end of June, and then they will decide when they announce these, which could be next quarter so from July 1. So much for ‘urgency’.”

A spokesman for MBIE says its report to the minister is expected to be published this quarter, subject to cabinet approval.

“The objective of the investigation was to identify any impacts of the CCCFA changes that came into force on December 1, 2021, considering the scale and nature of impacts to assess what – if any – further actions are needed,” the spokesman says.

“At the same time, initial changes to the CCCFA’s regulations and responsible lending code announced in March are progressing. These address concerns that the interpretation and implementation of the regulations has sometimes been more onerous and restrictive than the original policy intent.” 

MBIE consulted on an exposure draft of the initial changes last month and officials are analysing feedback with the resulting adjustments to the responsible lending rules set to be finalised next month.