The Government has lifted prescriptive loan affordability requirements from the Credit Contracts and Consumer Finance Act (CCCFA), easing the way Kiwis access finance.

On 31 July, detailed requirements for affordability assessments were removed, though lenders are still required to conduct reasonable inquiries into loan affordability.

Commerce and Consumer Affairs Minister Andrew Bayly explained that the change aims to streamline financial services and reduce compliance costs.

"Eleven pages of overly prescriptive affordability regulations will no longer be part of the CCCFA," Bayly stated.

Housing Minister Chris Bishop highlighted the stress and inefficiency the previous regulations caused for borrowers.

“The regulations treated people like children and required lenders to check personal expenses against Stats NZ data,” Bishop said, referencing the stringent checks borrowers faced.

The Responsible Lending Code has been revised to provide updated guidance on affordability assessments.

Bayly noted, “The updated Code manages the risk of unaffordable lending while giving lenders flexibility to assess affordability on a case-by-case basis.”

The reforms are part of the National-ACT coalition agreement, focusing on protecting vulnerable consumers while improving access to credit. “Today is about restoring flexibility and freedom to Kiwis,” Bishop added.

Lenders must still keep thorough records to demonstrate compliance, with penalties for those failing to make reasonable inquiries.

The Government consulted lenders and budgeting services, finding broad support for the changes.

Bayly concluded, “It is in no one’s best interest to loan money to people who cannot afford to pay it back.”