Parliament

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

 

Tougher consumer credit laws target loan sharks

Hon Bill English
Minister of Finance

6 November 2011
Media Statement
Tougher consumer credit laws target loan sharks

The Government plans to overhaul consumer credit laws to protect unwary consumers being preyed on by unscrupulous credit companies, Finance Minister Bill English says.

“There has been significant and much-needed reform of the investment side of the financial sector over the past three years,” Mr English says.

“However, credit providers remain largely unregulated and have no conduct requirements, leading some to exploit vulnerable people, resulting in severe financial hardship and spiralling debt. This is not acceptable.”

Cabinet has approved a package of changes including:
• Strengthening the Consumer Contracts and Consumer Finance Act (CCCFA) by adding new responsible lending requirements including that:
o The borrower must be reasonably expected to repay the loan without substantial hardship.
o The lender must be honest and transparent in dealing with the borrower.
• Creating a Code of Responsible Lending that sets out the types of practices accepted as meeting the principles of responsible lending.
• Giving the Financial Markets Authority (FMA) the power to issue formal warnings and cancel a person’s financial service provider registration if they fail to comply with the code and other relevant legislation.
• Provide that borrowers are not liable for the costs of interest or fees if their lender is not registered, as required, on the Financial Service Providers Register (a recent survey found 35 per cent of third-tier lenders were not registered).
• Amend the CCCFA to stipulate that advertising must not be misleading, deceptive, or confusing and must comply with the code, and allow the regulator to prohibit advertisements that fail to do so.
• Protect important goods, such as tools of trade, necessary household items, and motor vehicles with a value of up to $5000, from being used as security against a loan (except if the credit contract is for the purchase of such an item)
• Extend the 'cooling-off period', where a consumer has the right to cancel a credit contract, from three to five working days.
• Improve disclosure requirements, including that disclosure of key information and full terms and conditions must occur before the contract is made (presently this can happen up to five days after).
• Changes to the rules around oppressive credit contract provisions and hardship applications to provide increased consumer protection.

The package of reforms has been shaped by the Government’s Financial Summit, held in August, which brought together 250 people from community groups, budgeting services, NGOs, banks, financial regulators, and credit companies to look at ways of tackling irresponsible lending.

Because this is a complex area, the Government intends to release draft legislation for consultation on the proposed changes in advance of introducing final legislation to Parliament.

“These changes represent a multi-pronged approach towards promoting responsible lending by increasing consumer protections, requiring lenders to give borrowers more information and beefing up the powers of enforcement agencies.

“People need access to affordable credit. For some people who are a higher lending risk, the cost of credit will always be higher but that does not justify the highly exploitive and irresponsible lending practices of some lenders,” Mr English says.

<


________________________________________


© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Whether This Election Is Already A Foregone Conclusion

Currently, this election looks like being a no contest. The weekend’s Newshub poll has the centre left enjoying a roughly 57-36% lead over the centre right. Labour is on 50.1% and the Greens 6.5%, while National remains in the dreaded 20s at 29.6% and the Act Party is on 6.3%. Conditions continue to look terminal for New Zealand First. Despite being a stubborn brake on government tax policy and winning a few policy gains of its own, NZF is registering only a 1.9% level of support... More>>

 

Economy: Business Leaders’ Confidence Tanks As Top Kiwi CEOs Vent Their Frustrations

The New Zealand Herald’s Mood of the Boardroom 2020 Election Survey has been released with top business leaders saying New Zealand’s Covid-19 recovery is in peril – and they want a decisive role with Government in the country’s future. The annual ... More>>

ALSO:


Poll: Newshub-Reid Research Poll Shows National Rising But Labour Still Governing Alone

With less than three weeks to go, Labour remains in a position where it could govern alone in the latest Newshub-Reid Research poll* on 50.1% - down 10.8 percentage points. National has risen slightly to 29.6% (up 4.5 percentage points), but even with the ... More>>

ALSO:

Winston Peters Speech: The Gathering Storm Clouds: Ihumatao

Frequently around New Zealand you hear people say that politicians are all the same. It’s a convenient way to dismiss any careful investigation of the truth of that statement. New Zealand First since its inception has been committed to ‘one law ... More>>

ALSO:

National Agriculture Policy: Will Restore Farmer Confidence And Pride

A National Government will reduce regulatory burden and give farmers confidence for the future. Leader of the National Party Judith Collins and Agriculture spokesperson David Bennett announced National’s Agriculture policy in Gisborne today. “Agriculture ... More>>

ALSO:

Government: Taking Action To Reduce Waste And Plastics

Phase out single use and hard to recycle plastics by 2025 Create a $50m Plastics Innovation Fund to develop alternatives Standardise kerbside recycling The Labour Party is taking the next step in removing plastic rubbish from our oceans and environment ... More>>

Gordon Campbell: On Last Night’s Leaders Debate

Do political debates change voter intentions, and cause voters to switch sides? According to a 2019 Harvard Business School study conducted across 61 elections in nine countries involving 172,000 respondents, the answer would seem to be a resounding ... More>>

ALSO:

Dunne Speaks: The Election Campaign Just Grinds Slowly On And On

With just over three weeks until the General Election, the release of the first major pre-election opinion poll this week confirmed what was already being reported about this year’s campaign. Although the gap between Labour and National has narrowed ... More>>

Electoral Commission: Candidate And Party Lists Released

17 registered political parties and 677 candidates will be contesting the 2020 General Election Nominations have now closed and the Electoral Commission has released the electorate and party list candidates for 2020 online at vote.nz . Advance voting ... More>>

National: Plan To Restore NZ’s Prosperity

National’s Economic and Fiscal Plan carefully balances the need to invest in infrastructure and core public services while also reducing tax pressure on Kiwi families and businesses. National Leader Judith Collins and Finance spokesperson Paul Goldsmith unveiled National’s ... More>>

ALSO:


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels