Responsible Lending Rule Changes To Impact On The Ability To Obtain Credit

Financial Advice NZ had called for the Minister to review the unintended consequences of the CCCFA which came into effect on 1 December 2021 and have impacted the average Kiwi’s ability to obtain credit.

Today Minister Clark announced a range of small changes to the responsible lending rules. This was necessary as too many New Zealanders were unable to obtain credit which they would have been able to access previously.

Financial Advice NZ is pleased with these initial changes and looks forward to seeing the detail and timelines for implementation. We have reported that mortgage advisers have seen a significant reduction in pre-approvals not being renewed as well as reduced lending levels to all borrowers due to the new requirements of the CCCFA almost as soon as it was enacted.

It is important the Minister acts with speed to implement the changes announced today so kiwis who genuinely have the ability to service credit are able to access it. We also look forward to seeing the outcome of the Minister’s continued investigation and call for the implementation of all changes as soon as possible.

Financial Advice NZ would like to thank the Minister for making these initial changes prior to the completion of the investigation.

We have always supported the Minister’s intent to protect vulnerable borrowers. The intention of this legislation was not to reduce the availability of credit for the average New Zealander who was not vulnerable and could afford a mortgage – this was an unintended consequence.

We continue to believe the changes to the CCCFA, are a significant contributor to the average Kiwi not being able to obtain the same levels of credit they could prior to December 2021.

Financial Advice NZ will continue to advocate for Kiwi’s to be able to obtain credit where it is reasonable and suitable for their circumstances.

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