More protection from loan sharks

A Bill making the biggest changes to consumer credit legislation in more than a decade has passed its third reading in Parliament, Consumer Affairs Minister Craig Foss says.

The Credit Contracts and Financial Services Law Reform Bill protects the interests of borrowers and requires lenders to act responsibly.

“Time is fast running out for predatory lenders who try to exploit our communities. This Bill reflects the National Government’s commitment to protecting vulnerable New Zealanders from spiralling debt, without imposing unnecessary compliance costs on responsible lenders,” Mr Foss says.

“Rewriting the rules for consumer lending is an important part of the Government’s Business Growth Agenda, which aims to boost confidence and trust in our financial markets.”

The Bill amends the Credit Contracts and Consumer Finance Act, the Financial Service Providers (Registration and Dispute Resolution) Act, the Private Security Personnel and Private Investigators Act and the Personal Property Securities Act.

It also repeals the Credit (Repossession) Act and incorporates its content into an expanded Credit Contracts and Consumer Finance Act.

Key changes to legislation include:

Requiring responsible lending in the consumer credit market - lenders must act with skill, care and diligence in all dealings with a borrower throughout the life of a consumer credit contract.
Introducing a Responsible Lending Code to provide guidance on how a responsible lender should behave.
Requiring more timely and complete disclosure of loan terms and extending the ‘cooling off’ period for borrowers to cancel their loan.
Introducing a standing disclosure regime where lenders must provide free of charge their standard form contract terms and costs of borrowing.
Preventing goods from being repossessed unless they are specifically identified in the credit contract and limiting some essential household items from repossession altogether.
· Licensing of repossession agents and employees.

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