Final reminder to credit industry
Issued 31 March 2004-05 / 110
Final reminder to credit industry: 1 April start for new law
The Commerce Commission is reminding credit providers that they must be up with the play, when new credit law comes into full force tomorrow.
All of the provisions of the Credit Contracts and Consumer Finance Act 2003 will apply from 1 April, and contracts signed as of that date must comply with the new Act.
The legislation covers a wide range of consumer credit products including home loans, personal loans, hire purchase, credit cards, long-term leases and housing buy-back schemes. It will be enforced by the Commerce Commission.
Commission Chair Paula Rebstock says there has been an 18-month lead in time for the implementation of the Act to give businesses time to adjust. A lot of work has been done by the Commission during this time to ensure industry was aware of the changes and the need to comply.
“The Commission acknowledges that the vast majority of the industry will comply voluntarily with their obligations under the Act, however, we have strong enforcement powers to ensure the Act’s purpose is met.
“Providers have an obligation to comply and may find themselves facing significant penalties if they have not put appropriate systems and processes in place.”
Ms Rebstock says the changes in the legislation are designed to improve consumer information and to allow for flexibility and innovation for providers.
“The law will give the credit industry a set of standards that will assist consumers to make informed decisions about using credit, and who is offering the best deal. This in turn will promote healthy competition. It also brings New Zealand into line with international trends.”
The Act will assist consumers to understand the cost of borrowing upfront by requiring credit providers to provide a written disclosure statement. This statement must contain key information, including how much is being borrowed, what the credit will cost and how much each payment will be. In addition, the statement must be provided either before the contract is signed or within five working days.
Other key provisions of the new Act include the requirement that any fees associated with the credit must be reasonable; the ability to repay contracts early; consumers to be informed of default interest charges; and the right to have contracts varied in some circumstances involving unforeseen hardship.
Ms Rebstock says the new legislation will be closely monitored, and consumers should contact the Commission if they find that credit providers are not complying with the new Act.
Further information about the Act is available from www.comcom.govt.nz
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