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New law to reduce compliance costs for business

New law aims to reduce compliance costs for business

The recent passage of the Credit Contracts and Consumer Finance Act will reduce compliance costs for business as well as benefiting consumers, said Small Business Minister John Tamihere and Consumer Affairs Minister Judith Tizard.

Consumer Affairs Minister Judith Tizard said that in reviewing the legislation, the government concluded there was a need to avoid the awkwardness of mixing consumer and business borrowing in the same legislation. “This approach has ensured that neither protection measures for consumers, nor flexibility for business borrowers has been compromised,” said Judith Tizard.

The one aspect of the Act that specifically targets businesses is the retention of provisions to re-open oppressive contracts, which will continue to apply to borrowing for business purposes.

Small Business Minister John Tamihere welcomed legislative changes that reduce compliance costs for businesses.

“The Act removes the need to calculate and disclose the finance rate, and removes the requirement for commercial borrowers to comply with disclosure provisions designed to protect consumers. Businesses have gained limited benefit from these requirements, yet the costs of compliance have been significant.

“These provisions of the Act will not come into force until 1 April 2005, which gives businesses sufficient time to update their systems.

“These changes are significant benefits for New Zealand businesses and demonstrate the Labour Progressive Government's commitment to reducing business compliance costs, and to providing an environment in which business can prosper,” said John Tamihere.

The Act has received strong support from both creditors and consumers, and the Ministers are confident that the simplified law provided by this Act meets the needs of both sectors.

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