Changes to the CCCFA Regulations
The Credit Contracts and Consumer Finance Act (CCCFA), often referred to as the Triple CFA, is designed to help consumers make informed decisions, understand their commitments, and manage debt effectively.
The act applies to all types of credit contracts, for example:
- Personal loans and mortgages.
- Borrowing money on agreed overdraft.
- Purchasing products and services on credit (eg. hire purchases).
- Credit card use.
The 2024 Update to the CCCFA Regulations
In April this year, Commerce and Consumer Affairs Minister Andrew Bayly and Housing Minister Chris Bishop announced that the government would be taking steps to reform some of these restrictions. These reforms represent a major shift in how financial services will operate in the country. The goal is to improve access to home loans and other forms of credit while still strengthening consumer protections.
In July, the official announcement was made. Minister Andrew Bayly stated, “From tomorrow, 31 July, eleven pages of overly prescriptive affordability regulations will no longer be part of the Credit Contracts and Consumer Finance Act (CCCFA). This move will enable Kiwis to access finance with greater ease and confidence. When these regulations were incorporated into the CCCFA in December 2021, they had the unintended consequence of freezing out many Kiwis from accessing small loans. The process became so cumbersome that it was no longer viable for many financial providers to offer small loans, forcing vulnerable Kiwis to turn to high-interest loan sharks.”
The overly stringent checks made it difficult for those needing smaller sums – such as $500 to fix a car—to find safe credit options. With these changes, financial institutions can now assess loan affordability without the burden of a one-size-fits-all approach, making it simpler for Kiwis to access the finance they need.
Simplifying the Home Loan Process
Housing Minister Chris Bishop emphasised the impact of these changes will simplify the home loan application process, where the time to process home loans had significantly increased. The new reforms will still require lenders to act responsibly, ensuring that loans do not cause financial hardship, but they will now have the flexibility to assess each case individually rather than adhering to a rigid, one-size-fits-all process.
Alongside these changes, are several other initiatives aimed at improving consumer protection and reducing unnecessary bureaucracy. This includes improved dispute resolution to better protect consumers and the removal of duplicate reporting requirements.
At Rapson we wholeheartedly support these updates because they aim to make regulations simpler and more efficient, ultimately improving outcomes for consumers. The goal is to ensure that Kiwis can confidently and safely access the financial products and services they need.
For more information on how these changes might affect you, whether you’re looking to secure a home loan or manage your financial obligations, Rapson is here to help you achieve your financial goals.