Parliament

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

 

What the Government approved: technical detail

Hon J Anderton

Consumer Credit Law Review


What the Government approved: technical detail

Note: this outlines the proposals for a new Consumer Credit Bill in broad terms. Detail will be provided in the Bill.

Application of consumer credit legislation

The Credit Contracts Act 1981 and the Hire Purchase Act 1971 are to be repealed and replaced by a new Consumer Credit Bill.

The reopening provisions of the Credit Contracts Act are to be maintained without substantial amendment and will continue to apply to all credit contracts.

The remaining provisions of the Bill will only apply to credit provided for personal, domestic or household purposes. Australian provisions will be adapted to give effect to this.

Separate provisions in the Bill will regulate long-term consumer leases. The Bill will define features of a lease that makes it subject to regulation.

Transparency in consumer credit

The disclosure regime in the Credit Contracts will be maintained and enhanced through: · Disclosure of certain terms not currently required to be disclosed e.g. whether there is a charge payable upon early settlement, the borrower's right to cancel the contract (in certain circumstances). · An extension of the requirement for continuing disclosure. · A performance standard to requiring disclosure information to be expressed clearly, concisely, in a logical order and a manner likely to bring the information to the attention of the borrower. · Model forms which lenders may use to be sure they have complied with the performance standard. · Removing the requirement on lenders to calculate and disclose the finance rate.

Provisions found in Australian law regulating interest charges, fees and payments will be adapted and modified. Features of the regime will be: · A prohibition on charging interest in advance. · Providing that no interest charge may exceed the amount that would be charged by applying a daily interest rate to the unpaid daily balance owed by the borrower. · Modifying the above rule by allowing interest to be calculated on half-yearly, quarterly, monthly, fortnightly or weekly rests, and allowing lenders to "hold" scheduled payments until their due date. · Limitations on establishment fees and fees paid by lenders to third parties and passed to borrowers.

Borrowers will have the right to early repayment of a credit contract. Lenders will have the right to recover a charge for any reasonable estimate of loss resulting from the early repayment of a fixed credit contract. Guidance will be provided by provision of a formula lender's may use in calculating "loss".

The three-day cooling-off period following initial disclosure will be maintained.

Credit-related insurance

Repayment waivers and extended warranties will be defined as credit-related insurance for the purpose of the Bill.

Insurance policies must be disclosed to borrowers.

Transitional provisions

Contracts formed prior to the Bill coming into force will continue to be governed by the law in force at the time the contracts were formed. However, revolving credit contracts formed prior to the Bill coming into force must comply with the Bill after a transition period.

Measures raised in consultation that will not be included in the Bill

The following will not be included in the Bill: · A third-party, centralised disclosure mechanism. · A "hardship" provision allowing borrowers to seek Court-order variations to the terms of a credit contract. · Reopening provisions based on a lender's failure to assess a borrower's ability to repay or a requirement on lender's to undertake a budgeting process with prospective borrowers. · A prohibition on lender's nominating an insurer.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Werewolf: What Does Winston Peters Want His Legacy To Be?

A lot of people in New Zealand seem to resent Winston Peters and the power that he appears to have. “Appears” being the operative word. In reality, Peters will have power only up to the point that he uses it.

By next week, he’ll have become just another junior player in an MMP governing arrangement, battling to hold onto the gains he was promised. More>>

 

Rising Toll: Road Safety Needs To Be A Higher Priority

Official advice released to the Green Party under the Official Information Act shows that the previous National Government dismissed an option to make road safety its most important transport priority after being told the road toll was rising. More>>

ALSO:

Wellington.Scoop: Arrests At Blockade Of "Weapons Expo"

“We encourage people in Wellington to get down to the Westpac Stadium now for a day of awesome peace action. There will be plenty of food, music and activities to keep us sustained through the day.” More>>

ALSO:

Rorschach Restructuring: PSA Taking Inland Revenue To Court Over Psychometrics

The Public Service Association will be seeing Inland Revenue in Employment Court over its intention to psychometrically test employees reapplying for their roles at the department as part of its controversial Business Transformation restructuring plan. More>>

ALSO:

Nuclear Disarmament: Nobel Peace Prize 2017 Awarded To ICAN

Congratulations from iCAN Aotearoa New Zealand to international iCAN, the other iCAN national campaigns and partner organisations, and the countless organisations and individuals who have worked so hard for a nuclear weapons-free world since 1945. More>>

ALSO:

Expenses: Waikato DHB CEO Resigns

An independent inquiry has identified that Dr Murray had spent more than the agreed $25K allocated for relocation costs, and other unauthorized expenses involving potential financial breaches of the chief executive’s obligations. More>>

ALSO:

Wellington.Scoop: Sad About The Trolley Buses?

The Regional Council’s MetLink is today spending money to tell us that it really loves Wellington’s trolley buses, even though they’re all being taken off our roads by the end of this month. More>>

ALSO:

Post-Election: Preliminary Coalition Talks Begin

New Zealand First will hold post-election preliminary discussions in Wellington with the National Party tomorrow morning and the Labour Party tomorrow afternoon. More>>

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election