Recent changes to the Credit Contracts and Consumer Finance Act 2003 have been creating quite a storm in the media.

Some of the headlines read:
"Shattered dreams as home loan approvals plunge after lending law changes."
"Home loan borrower told: You spend too much on your dog."
"New lending laws a 'nightmare' for people seeking home loans."

Despite general unrest pre and post implementation of the changes on 1 December 2021, Commerce and Consumer Affairs Minister, David Clark, remains confident saying "My hunch is what we're seeing is the result of the changes making an impact in the right way."  Despite this, Clark has ordered an investigation into the impact of the recent changes after a spike in industry pressure from lenders, mortgage brokers, opposition parties and consumers regarding the restrictive effect of the new rules. 

The Terms of Reference (released Monday 31 January 2022) outline the details of the investigation.  The investigation will be led by the Ministry of Business, Innovation and Employment, with critical input provided by other members of the Council of Financial Regulators.

In summary, the objective of the investigation is to identify any intended or unintended impacts of the amendments, consider the scale and nature of these impacts, and assess what, if any, further actions are required.  Notably, this is a wider remit than whether the banks are interpretating the new rules correctly, which is what Clark initially indicated the investigation would focus on.

The first piece of advice from the investigation is anticipated by "early-mid February" with further advice expected in April.