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Credit review

The Government has amended consumer credit laws to better protect consumers from irresponsible lending.

The Government has amended consumer credit laws to better protect consumers from irresponsible lending.

On this page:

Information for business and consumers

See Changes to credit laws for information for businesses and consumers about the credit law changes.

Laws being reviewed and timing of changes

The Credit Contracts and Financial Services Law Reform Bill makes changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the Financial Service Providers (Registration and Dispute Resolution) Act 2008, and the Personal Property and Securities Act 1999. It also repeals the Credit (Repossession) Act 1997 and incorporates its provisions within the CCCFA.

Timing of changes

The Bill received Royal Assent on 6 June 2014, but many of the provisions in the Credit Contracts and Consumer Finance Amendment Act 2014 and the Financial Service Providers (Registration and Dispute Resolution) Amendment Act 2014 do not come into effect until later. All provisions must be in place on 6 June 2015 (at the latest).

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Background to the review

The package of reforms was shaped by the Financial Summit hosted by Hon Simon Power, Minister of Consumer Affairs. This was held on 11 August 2011 in Auckland and was chaired by Sir John Anderson.

The summit brought together 250 people from community groups, budgeting services, NGOs, banks, financial regulators, and credit providers to look at ways of tackling irresponsible lending.

Financial summit participants called for legislation to require responsible lending and for greater penalties for lenders who are not registered on the Financial Service Providers Register.

Read more about the Financial Summit.

The reforms were also influenced by a review of the Credit Contracts and Consumer Finance Act carried out by the Ministry of Consumer Affairs in 2009 and by various research on consumer credit in New Zealand. This research was done by the Ministry of Consumer Affairs and others.

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New government regulations and Responsible Lending Code

The Amendment Act requires that some new government regulations and a Responsible Lending Code be developed.

The Responsible Lending Code was issued on 17 March 2015.

Regulations will come into force on 6 June 2015 which:

  • specify the information on fees and interest rates which lenders must make publicly available
  • prescribe the credit card minimum repayment warning
  • update model disclosure forms (to reflect the additional key information which lenders must disclose to borrowers prior to entering a credit agreement).

You can access the regulations on the New Zealand Legislation website.

We are also developing regulations to exempt securitisation arrangements from certain obligations (e.g. obligations to disclose transfer of a credit agreement). These regulations must be in place before 6 June 2015.

The Amendment Act introduces an infringement offence regime. We plan to have regulations for this new regime in place by June 2015.

The Amendment Act also introduces a licensing regime for repossession agents. Repossession agents and employees can apply for licences and certificates from 6 March 2015.

Read more about Repossession agents the process and what agents and employees need to do to apply on the Ministry of Justice website.

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Progress of the Bill through Parliament

Information about the progress of the Bill through Parliament is given below (most recent events are listed first).

See Parliament Brief: The legislative process for information about the stages involved in passing legislation.

Supplementary Order Papers

On 7 May 2014, the Minister of Consumer Affairs tabled two Supplementary Order Papers (SOPs) to the Bill.

SOP 442 adjusts some of the drafting in the Bill reported back by Select Committee. For example, some further drafting clarifications have been made.

SOP 443 divides the Bill into two separate amendment Acts, the Credit Contracts and Consumer Finance Amendment Act and the Financial Service Providers (Registration and Dispute Resolution) Amendment Act.

See:

Third reading of the Bill

The Credit Contracts and Financial Services Law Reform Bill passed its third reading on 27 May 2014.

More protection from loan sharks – press release from the Minister of Consumer Affairs, Hon Craig Foss.

Second reading of the Bill

On 17 March 2014, the Commerce Committee reported back to Parliament on the first draft of the Credit Contracts and Financial Services Law Reform Bill. The Committee recommended a number of amendments to the Bill. The Bill had its second reading in Parliament on 10 April 2014.

The Committee considered approximately 70 submissions on the Bill, including 48 oral submissions.

First reading of the Bill

The Credit Contracts and Financial Services Law Reform Bill passed its first reading on 17 September 2013. Parliament's Commerce Committee was asked to examine the Bill.

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Law reform process – Bills and Cabinet decisions

Information about the Bills and Cabinet decisions involved are given below (most recent listed first).

Credit Contracts and Financial Services Law Reform Bill

On 18 April 2013, the Minister of Consumer Affairs tabled the Credit Contracts and Financial Services Law Reform Bill.

The Bill reforms the suite of legislation that governs credit contracts, from before their inception until their termination or enforcement. It amends the Credit Contracts and Consumer Finance Act 2003, and repeals the Credit (Repossession) Act 1997 and incorporates its provisions within an expanded CCCFA.

The Bill amends the CCCFA to strengthen protection for consumers. In particular, it introduces the principle of responsible lending.

The Bill will also make a number of major changes to the law governing repossession of consumer goods. These changes reflect the recommendations of the Law Commission in its Review of the Credit (Repossession) Act 1997 (Law Commission Report 124, April 2012).

Read the Credit Contracts and Financial Services Law Reform Bill on the Parliament website.

See Consumer credit law changes introduced to Parliament – media release by Hon Craig Foss, the Minister of Consumer Affairs.

Exposure Draft

In April 2012, the Credit Contracts and Consumer Finance (CCCF) Amendment Bill Exposure Draft was released setting out how it was proposed to incorporate new responsible lending requirements into the Act. Submissions were invited on the Exposure Draft and closed on 25 May 2012.

See:

In response to submissions received, and the recommendations contained in Law Commission Report 124: Consumers and Repossession, Cabinet has agreed to incorporate the current Credit (Repossession Act) 1997 in to the Credit Contracts and Consumer Finance Act 2003. Cabinet has also agreed to make a number of other changes to the existing provisions in the Act.

See:

Responsible lending

On 31 October 2011, Cabinet agreed to a package of reforms to the consumer credit law. See:

The reforms will introduce responsible lending requirements for consumer credit providers. The changes that Cabinet agreed were outlined in the following press release:
Government to target loan sharks – Hon Simon Power.

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Discussion documents

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Research on consumer credit

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Media releases

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Current legislation

 

Last updated 29 April 2015