CCFA Changes 2021
The CCC…what?! Don’t worry – we get it. The left-right-centre acronyms can be confusing. The CCCFA stands for the Credit Contracts and Consumer Finance Act. It is legislation detailed by the government to protect you as a borrower and recently, it had a facelift. This facelift explains why there are now a lot more questions we have to ask of you before heading to the bank on your behalf.
What is the CCFA?
The acronym CCFA stands for Credit Contracts Consumer Finance Contract Act, this piece of legislation protects you as the borrower when you are: 
- Taking out a personal loan or mortgage
- Using a credit card
- Borrowing money on an agreed overdraft
- Borrowing money and services on credit – often referred to as a hire purchase
The CCCFA also requires all lenders to give you certain pieces of advice, and provide certain documents available to you.
What does the CCFA do?
In essence, the CCCFA is a piece of legislation that protects you as the consumer or borrower against predatory lenders most commonly referred to as ‘loan sharks.’ The CCFA is used to keep the following people or businesses accountable to a government body that audits them to make sure that they are providing fair and creditable lending and advice.
- Credit providers, including some insurance companies, finance and mortgage brokers or paid advisors.
- Lease out goods
- Operate or promote buyback schemes
What are the changes that are coming in December 2021?
2021 has been a big year for this piece of legislation – it has been aired out, looked at closely and many changes have been made. This mostly has had an impact on those businesses that:
- Provide credit, including some insurance companies, finance and mortgage brokers or paid advisors.
- Lease out goods
- Operate or promote buyback schemes
These people and businesses have been asked to undertake studies and provide more disclosure. People and businesses working in areas that the CCFA applies to are also being asked to undertake more thorough questioning of you as a borrower to make sure that they are providing responsible lending. There are many more changes – you can take a closer look at them here: Commerce Commission – changes to credit laws
What does that mean for you, the ‘average’ borrower?
Well for you, as the borrower, this means that you should expect to be asked more questions – be expected to provide much more information than you have before. Prepare to be asked by Banks for the last 6-12 months of account conduct and for it to be scrutinized and follow up questions to be asked – many follow up questions about your spending habits. This is a great time to have a Mortgage Advisor onside – as these follow up questions are
generally asked of them and they can field them to the best of their abilities – this may save you time that would be spent on the phone to banks talking over your account conduct and future foreseeable expenses – this is before being pre-approved for any lending.
For you, the average borrower, it is a great time to start a relationship with a Mortgage Advisor, if you already have a relationship with an adviser, they may talk to you about changing banks or take a look at Non-Bank lenders which are well and truly a normal ‘thing’ now. The average borrower is no longer in the driver’s seat, it is no longer your right to borrow money, the banks are not obliged to lend you anything. We are potentially seeing a credit crunch coming and in that climate, a Mortgage / Financial Advisor is your best friend!
Get in touch with us here at Mortgage Sure when you are thinking about borrowing and we can help you get on the right side of the bank or non-bank lender.
References:
Commerce Commission – changes to credit laws
Consumer Protection
While we’re home loan experts, our blog posts are for general information purposes only and are not intended as financial advice. If at any stage you need personalised advice, get in touch on 06 8788 4444 or Ben or Mark.
