By my.lawsociety
The Credit Contracts and Consumer Finance Amendment Act 2014 comes into force on 6 June 2015.
The legislation amends the Credit Contracts and Consumer Finance Act 2003 and makes significant changes to New Zealand's consumer credit laws. While most of the changes apply only to contracts entered into on or after 6 June 2015, there are some exceptions.
One of the key changes is the introduction of lender responsibility principles. These require lenders to make reasonable inquiries before entering into a loan or taking a guarantee to be satisfied that the credit provided will meet the borrower's needs.
The lender must also be satisfied that the borrower or guarantor will be able to make the payments under the loan, or to comply with the guarantee, without suffering substantial hardship.
The new laws introduce harsher penalties for lenders who do not follow the rules.
Lenders will also be required to make information about their fees and interest rates publicly available, making it easier for consumers to compare rates and fees before borrowing money.
Repossession agents will need to be licensed and there are new rules prohibiting repossession of essential household items such as beds and heaters.
Another change in the law will require credit card billing statements to include a minimum repayment warning.
The Commerce Commission says the arrival of the Responsible Lending Principles has set a benchmark for a more transparent and robust lending process which all lenders must follow.