Parliament

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"The old credit legislation was out of date, complex, difficult to understand, and gave consumers very little clout against unfair behaviour.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"We need to remove outdated credit concepts and make the law easier for consumers and business to understand.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

PM's Press Conference: Pike Re-Entry Agency

At today's post-cabinet press conference Prime Minister Jacinda Ardern was joined by Minister Responsible for Pike River Re-entry Andrew Little to announce plans for the new agency for re-entry of the mine.

The Pike River Recovery Agency, Te Kahui Whakamana Rua Tekau ma Iwa, will be officially established on 31 January 2018 and will work with the Pike River families with the intention of manned entry of the drift before March 2019. More>>

 

Foreign Affairs: Patrick Gower Interviews Jacinda Ardern

Prime Minister Jacinda Ardern says discussions have already begun on how to bring climate change refugees into New Zealand under a Pacific seasonal employment plan... More>>

ALSO:

Gordon Campbell: On The Centre Right’s Love Of ‘Nanny State’

You’d almost think it was 2005 again. That was a time when the rugged individualists of the centre-right were being beset by government regulations on the nature of light-bulbs, the size of shower heads, the junk food available at school tuck shops and other such essentials... More>>

Speaking Of Transport: Public Engagement On Wellington Scenarios

“Our work on possible solutions for Wellington’s transport future is ongoing, but has progressed to the stage where we’re ready to share our ideas with the public and seek their feedback to help guide our next steps...” More>>

ALSO:

Parental Leave: National's Time-Sharing Change Fails

National has proposed a change to the Parental Leave and Employment Protection Amendment Bill that would allow both parents to take paid parental leave at the same time, if that is what suits them best. More>>

ALSO:

Train Free Thursday: Workers Strike To Defend Terms Of Employment

"They signed up to these conditions a year ago when they got the contract for Wellington's rail services. Now they're trying to increase profits by squeezing frontline workers." More>>

ALSO:

Seclusion: Ombudsman Emphasises Importance Of Monitoring

Disability Rights Commissioner Paula Tesoriero says that while there have been changes to the Education (Update) Amendment Act 2017 to prohibit the use of seclusion, the report is an important reminder of the importance of regular monitoring of schools. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election