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A triumph for borrowers; Cabinet agrees to CCCFA reform

14 March 2022

The Government has announced a reform on the Credit Contracts and Consumer Finance Act (CCCFA).

 The Act was created in December, last year. Since it began, it has been highly criticised as being too restricted and unreasonable. The original intention was to ensure vulnerable borrowers would be able to get a loan that they can service confidently. Unfortunately, it has also meant that almost everyone else was being penalised too.

Photo by Iza Gawrych on Unsplash

Photo by Iza Gawrych on Unsplash

David Clark, Minister of Commerce and Consumer Affairs, says, there was “little enthusiasm for wholesale changes to the Act, but instead a preference for some practical amendments.”

There are many reasons why there has been a reduction in lending, and the CCCFA isn’t the main driver. But it does mean that Lenders will be able to process applications more quickly.

Steve Davies, Mortgage Adviser at Cole Murray, says “I am glad to see the government is relooking at the CCCFA rules. I am sure these changes will allow a more practical approach to mortgage lending.

“I understand it is necessary to have regulations to protect vulnerable borrowers and I feel that is where a mortgage broker is a real asset. They can help guide applicants, including vulnerable borrowers, through the application process. They get an understanding of the borrowers situation and can hopefully find some solutions that will suit them best.”

Proposed initial changes to regulations and Responsible Lending Code agreed by Cabinet:

Important to note: the changes are not the final word.

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