The Government brought in a number of changes to the Credit Contracts and Consumer Finance Act (CCCFA) late last year, with officials saying the move would mean Kiwis could expect better protection from high-cost loans and unaffordable debt.
But since their introduction in the lead-up to Christmas, there have been numerous reports of would-be home-buyers having mortgage applications knocked back due to their spending habits - including the amount of takeaways or restaurant meals they purchased, or domestic travel.
Clark said tonight: "Whilst we are in the early days of new regulations to protect vulnerable borrowers, I have asked the Council of Financial Regulators (COFR, comprising the Reserve Bank, the Treasury, Financial Markets Authority, MBIE and Commerce Commission) to bring forward their investigation into whether banks and lenders are implementing the CCCFA as intended.
"Banks appear to be managing their lending more conservatively at present, and this is likely due to global economic conditions.
"It may also be that in the initial weeks of implementing the new CCCFA requirements there has been a decision to unduly err on the side of caution."
Clark said that "a number of factors affecting the market have occurred at the same time as the CCCFA changes", with those including increases to the Official Cash Rate (OCR), Loan-to-Value (LVR) changes and an increase in house prices and local government rates.
"An investigation by COFR will determine the extent to which lender behaviour, in respect of the CCCFA, is a significant factor in changes to banks' lending practices," Clark said.
Act leader David Seymour said it was "welcome news" that Clark had asked the Council of Financial Regulators to speedily inquire into December's changes to the Credit Contracts and Consumer Finance Act.
But he said what he wanted was an "inquiry" which "must be real".
"I continue to hear about people turned down or credit for bizarre reasons," Seymour said.
"Today I heard of someone who missed out on credit for spending too much on their cat, another because their kids shared a room. This madness must be taken seriously by the minister and not kissed off with a weak inquiry.
"David Clark needs to realise this issue is serious and will not go away. As the madness spreads, he needs to take responsibility. I will keep pushing for the Finance and Expenditure Committee to address this issue if the minister does not set out the details of a serious inquiry."
When the changes were introduced in early December, Clark said: "Today's changes require all lenders to complete thorough checks to ensure loans are suitable and affordable for their customers, preventing them from getting into debt they simply cannot afford.
"It's vitally important to protect people and whānau from falling into the trap of taking on unaffordable debt, and to stop those who take advantage of those in vulnerable circumstances."
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David Clarke, awesome. He will sort it.
Like all the other portfolios he's successfully handled.
So many people warned of the likely consequences of this piece of left-wing populist policy-making, but only now does Labour see the light. Their continued incompetence, together with the rabble known as National, means that the average quality of our Wellington representatives has surely hit an all-time low.
Yet another example of poor legislation from this bunch …. Knee jerk and rushed solutions with unintended consequences will be their legacy. Why not leave the lending to the banks - after all they don’t want to lose the money, I assume.
And the banks job is to sell money.
This government seems hell bent on slowing everything thing down, especially those trying to make money.
And well Jacinda , you have certainly achieved this.
But thankfully you and all you Ministers will all continue to get your lavish salaries.
If only they were performance based.
Just chill David. Save the cash for when we need to reform of the public sector.