New credit legislation gives consumers more clout
New credit legislation to give consumers more clout
New consumer credit legislation introduced to parliament yesterday will make credit providers more accountable to consumers, Acting Consumer Affairs Minister Lianne Dalziel said today.
The new legislation will replace the Credit Contracts Act 1981 and the Hire Purchase Act 1971, which are outdated, complex, difficult to understand, and give consumers little redress for unfair behaviour by lenders.
“The Bill seeks to modernise the law around consumers borrowing money, and to make it easier for consumers and business to understand. It provides for clearer contracts, with more useful information to consumers,” Lianne Dalziel said. The important features of the Bill are improved redress for consumers, stronger enforcement through powers extended to the Commerce Commission, better information for consumers before making credit decisions, and a fairer deal in relation to interest charges, fees, and early repayment.
“Lenders of last resort, or loan sharks, regularly breach the law, yet few people take credit cases to court or to the Disputes Tribunal because the law is seen as too complex, the process too costly or they feel intimidated. In future lenders who breach the law and rip off consumers, will be held accountable.
“The Courts will have wider powers to impose increased penalties, such as fines of up to $30,000. The reforms include a new, simplified formula for automatic penalties against lenders who breach information disclosure requirements.
“The Bill also benefits business. It will not apply to commercial credit (although existing reopening provisions are retained), and it will reduce red tape and compliance costs compared with the status quo. The legislation will make it easier for consumers to spot a bad deal, pushing disreputable lenders out of the industry and promoting confidence in the vast majority of law-abiding businesses.
“I’m sure this Bill will be welcomed by consumers, consumer organisations and the majority of lenders. I know that it will give consumers a better deal and make a difference when they enter into credit agreements in the future. The simplicity of the design of this Bill makes it a win-win for consumers and business.” said Lianne Dalziel