By Melissa Higham - 25 May 2012
Lending practices and credit law in New Zealand have come under
considerable criticism in the last few years. This has
resulted in significant reforms to the Credit Contracts and
Consumer Finance Act 2003 which are currently before
Parliament.
There is a widely held view that New Zealand still has a lot of
irresponsible lending and unscrupulous lenders. The
proposed reforms are being introduced to toughen consumer credit
laws (particularly targeting loan sharks) and to protect
consumers. Whilst this may be the target, the reforms will
have wide reaching implications for all
lenders.
The proposed reforms include:
- Making it illegal to lend money to someone when the loan
repayments would cause substantial hardship.
- Extended of 'Cooling Off' Periods.
- Changes to the disclosure obligations.
- Consequences for lenders who are not registered Financial
Service Providers.
- Changes to how lenders deal with hardship applications.
- Prohibitions on misleading, deceptive or confusing
advertising.
- Further rules in relation to credit charges and fees.
- Introduction of a Code of Responsible Lending (to be published
within two years of the Bill coming into force).
If you are in the business of lending to consumers you will need
to ensure you keep up to date with the changes that are
coming.
If you have any queries about how this may affect your lending
practices please contact us.