NZ’s consumer credit law

New Zealand's consumer credit law has changed which means if you are a business or customer providing or receiving credit there are a number of changes that you need to know about.

The Credit Contracts and Consumer Finance Amendment Act 2014 and the Responsible Lending code came into force on the 6th June 2015 and include key changes to lender responsibility principles, repossession of consumer goods, and amendments to some disclosure rules outlined in the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

This law is in place to protect customers when they borrow money and covers a broad range of transactions including consumer loans, leases and buy-back transactions. If you have a mortgage, use a credit card or buy goods and services on credit, have a loan or overdraft facility then you’ve probably entered into a consumer credit contract.

As a customer you should become familiar with these changes as they are in place to protect you when borrowing money -  the legislation helps you to understand what terms you are signing up to and provides handy information to help you find the best deal for you while keeping track of your debts. If you’ve entered into a consumer credit contract then you also have rights under these acts.

As a business, if you provide credit to individuals or small businesses then you may have to make some changes to your lending processes to ensure that you comply with the law and protect your customer’s rights. The changes made mean that as a lender you must do everything you can to help your customers make an informed decision when entering into an agreement, you must also make reasonable enquiries into a customer’s position to take on a loan, acting reasonably and ethically.

On top of this, as a lender you need to make sure that your business conduct in lending and collecting isn’t oppressive or in breach of reasonable standards of commercial practice. When it comes to credit insurance, you must assist your customer to make an informed decision about entering into a credit-related insurance contract. Finally, you must be registered on the Financial Service Providers Register and belong to the dispute resolution scheme, as well as meet all other legal obligations to the customer under the Fair Trading Act 1986 and the Consumer Guarantees Act 1993.

There will be much higher penalties imposed on lenders (up to $200,000 for an individual and $600,000 for a company) and tougher consequences for breaking the law. The Commerce Commission also has more ability to enforce the law, for example they are able to issue infringement notices for some minor offences while the courts can restrict lenders’ actions and order that lenders compensate customers.

Baycorp prides itself in working alongside people who make it easy for their customers to free themselves from debt – meaning you too are free. We encourage you to do everything you can to get up to speed on the CCCFA changes and welcome any queries you might have on these changes.

Are you CCCFA ready? If you are in the business of providing credit, see whether you comply with the new legislation by reading our Q&A's here.

If you are a customer and want to know more about your rights and the changes made please check out this link or you can review our FAQs.