Unlocking Efficiency: CCCFA Changes Transform New Zealand Lending 

In a significant shift for lenders in New Zealand, the Credit Contracts and Consumer Finance Act (CCCFA) is changing to streamline and simplify income verification to support responsible lending. 

The CCCFA legislative reform presents a new opportunity for lenders, moving towards a more efficient system focused primarily on income verification. 

What’s Changing? 

The most notable change for lenders is the reduced requirements for expense verification.  

The revised CCCFA allows lenders to apply averaged expected values to expenses using household expense measures (HEM) based on factors including location, age, dependents, and marital status. The changes simplify the lending process while maintaining responsible lending practices.  

Previously, lenders were required to conduct a detailed analysis of an applicant’s income and expenses, scrutinising bank statements and transactions to assess creditworthiness.  

The process was time-consuming, as applicants were required to share transaction data or submit actual documents (such as physical bank statements) for scrutiny and review.  As a result, there was a significant reduction in lending for amounts below $10,000 due to the extensive effort involved. Many borrowers turned to alternatives, such as payday lenders. 

The Opportunity for Lenders in New Zealand 

Instead of delving into detailed bank statements, lenders can now focus on income verification using common documents such as payslips and Income Tax Assessments. The shift is welcomed by many lenders, who are keen to rid themselves of the burdensome task of manually analysing documents such as bank statements.  

Forward-thinking lenders in New Zealand can now use technology to process documents (such as payslips) automatically and make decisions efficiently. Technology also affords lenders and their borrowers with the following benefits:

1. Faster Decisions: With the reduced need for detailed expense analysis, lenders can make quicker decisions, speeding up the loan approval process.
2. More Efficient Processes for Low-Value Loans: Particularly for loans under $10,000, the new rules allow for a more straightforward and efficient process. 
3. Lower Costs: The simplified verification process can lead to lower operational costs for lenders through automated approaches. 
4. Improved Customer Experience: Applicants can expect a more privacy-friendly experience, with fewer intrusive requests for personal financial information.
5. Increased Completion Rates: The streamlined process will reduce dropout rates, as applicants face fewer hurdles in the application process.  
6. Consumer Choice: Borrowers can now choose between submitting bank statements or other documents such as payslips and Income Tax Assessments for income verification, enhancing their control over the process. 

How Fortiro Can Help 

With the recent changes to legislation, Fortiro Accelerate can assist in the following ways: 

• Efficiency and Automation: Fortiro can automate income verification through payslips, reducing the manual effort required from lenders. 

• Enhanced Customer Experience: Fortiro supports an improved privacy and faster decision-making process, which benefits both lenders and borrowers. 

• Fraud Prevention: Fortiro provides a robust analysis of payslip verification, preventing fraudulent applications. 

• Higher Completion Rates Fortiro supports lenders to provide choice and flexibility to its applicants. As a result, lenders can cater to diverse needs and preferences and borrowers have more options for income verification, resulting in higher applicant completion rates. 

Fortiro Accelerate is uniquely positioned to assist lenders take advantage of the recent CCCFA changes to streamline proof of income checks from payslips, drive efficiencies and create a faster ‘time to yes’.  

There are over 35 financial institutions (including some of Australia’s largest banks) using Fortiro’s platform in their loan application process.   

Conclusion 

The changes to the CCCFA mark a new era in lending, introducing a more streamlined, efficient, and consumer-friendly process. For lenders, this means faster, more cost-effective operations. For borrowers, it translates to quicker decisions and greater control over their loan applications.  

Fortiro is here to help lenders in New Zealand transition to today’s dynamic lending environment and provide a faster ‘time to yes’ through its best-of-breed automated solutions. 

To learn how Fortiro can help you provide speedy and safe loan approvals through technology, click here to register your interest in a complimentary consultation.