Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Consumer Credit Laws to be overhauled

8 August 2001
Media Release

Consumer Credit Laws to be overhauled

The Government is going to change the law to protect consumers against loan sharks and unfair credit practises.

The Minister of Consumer Affairs, Jim Anderton, today announced the Labour Alliance Government's intention to replace the Credit Contracts Act 1981 and the Hire Purchase Act 1971 with a tougher single Consumer Credit Bill.

"The Ministry of Consumer Affairs has highlighted two new examples of companies who have been acting in ways that are not acceptable.

"Financial Options of Manukau City have been using some contracts which do not disclose any financial information and are charging excessive fees.

"Jackson Investments of Christchurch were putting stiff penalties onto early repayments for vehicles and inflating the price of vehicles on the contracts."

"Although many of these practises appear to be unlawful anyway, these reforms will send a clear message to all bad loan companies that we will no longer let them get away with ripping people off.

"The old credit legislation was out of date, complex, difficult to understand, and gave consumers very little clout against unfair behaviour.

"The new bill will modernise the law and will be designed to cater for existing credit practices, including the growing computerisation of banking and loan services.

"We will also be creating flexibility to cater for future credit products.

"We need to remove outdated credit concepts and make the law easier for consumers and business to understand.

"The important features of the proposed reforms are improved redress for consumers, a public enforcement agency, better information for consumers to help them make better credit decisions, and a fairer deal in relation to interest charges, fees, and early repayment.

"Lack of enforcement is a key problem with the current legislation, as it relies on consumers taking action themselves against lenders.

"Responsible credit and lending institutions such as reputable finance companies and banks have nothing to fear.

"Evidence from the Ministry of Consumer Affairs showed that marginal lenders and lenders of last resort regularly breach the law. Very few people take credit cases to a Court or Disputes Tribunal because the law is too complex, it costs too much, or they feel intimidated.

"I will be seeking funding to give the Commerce Commission the authority and resources to investigate the activities of lenders and take action if necessary.

"This will reduce the power imbalance between lenders and consumers and increase the chances of legal action being taken against lenders," said Jim Anderton.

Other features in the proposed changes include:
- A performance standard that will require lenders to provide contracts that are clearer and easier to understand. Model forms will be written into the Bill to assist lenders.
- Lenders cannot charge interest in advance.
- Clear rules for the early repayment of loans, including a formula that may be used to more fairly calculate the cost of early repayment.
- Businesses will not be covered by the changes. Businesses will continue to be covered by the Fair Trading Act 1986, The Personal Property Securities Act 1999 as well as protections such as the Banking Ombudsman. Removing their coverage from consumer credit laws will reduce red tape and compliance costs. The Ministry of Economic Development will look at any specific small business credit requirements.

The Bill is being drafted with the aim of introducing it to Parliament in the first half of next year.


ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Also, Loan Interest: Productivity Commission On Tertiary Education

Key recommendations include better quality control; making it easier for students to transfer between courses; abolishing University Entrance; enabling tertiary institutions to own and control their assets; making it easier for new providers to enter the system; and facilitating more and faster innovation by tertiary education providers... More>>

ALSO:

Higher Payments: Wellington Regional Council Becomes A Living Wage Employer

Councillor Sue Kedgley said she was delighted that the Wellington Regional Council unanimously adopted her motion to become a Living Wage employer, making it the first regional council in New Zealand to do so. More>>

ALSO:

Scoop Images:
Dame Patsy Reddy Sworn In As Governor-General

This morning Dame Patsy Reddy was sworn in as the New Zealand Realm’s 21st Governor-General. The ceremony began with a pōwhiri to welcome Dame Patsy and her husband Sir David Gascoigne to Parliament. More>>

ALSO:

Ruataniwha: DOC, Hawke's Bay Council Developer Take Supreme Court Appeal

The Department of Conservation and Hawke's Bay Regional Investment Company (HBRIC) are appealing to the Supreme Court over a conservation land swap which the Court of Appeal halted. More>>

ALSO:

With NZ's Marama Davidson: Women’s Flotilla Leaves Sicily – Heading For Gaza

Women representing 13 countries spanning five continents began their journey yesterday on Zaytouna-Oliva to the shores of Gaza, which has been under blockade since 2007. On board are a Nobel Peace Laureate, three parliamentarians, a decorated US diplomat, journalists, an Olympic athlete, and a physician. A list of the women with their background can be found here. More>>

Gordon Campbell: On The Key Style Of Crisis Management

At Monday’s post Cabinet press conference Key was in his finest wide- eyed “Problem? What problem?” mode. No, there wasn’t really a problem that top MPI officials had been at odds with each other over the meaning of the fisheries policy and how that policy should be pursued... More>>

ALSO:

Mt Roskill: Greens Will Not Stand In Likely Post-Goff By-Election

“The Green Party’s priority is changing the Government in 2017, and as part of that we’ve decided that we won’t stand a candidate in the probable Mt Roskill by-election... This decision shows the Memorandum of Understanding between Labour and the Green Party is working." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news