Review of Consumer Credit law

Credit Contracts and Consumer Finance Act (CCCFA)

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MBIE recently asked for feedback about problems people are facing when borrowing and lending, and potential ways to address these.

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See here for information about the consultation.

The next step is for MBIE to formulate recommendations arising from the Review.

Policy decisions will be announced later in 2018.

Supporting research

MBIE established a baseline of lender behavior before the reforms came into force in 2015, to allow for future evaluations of the effectiveness of the law changes. The desk-based study of lenders for 2017/2018 provides comparative analysis on the lender landscape and common advertising and disclosure practices before, and two years, after the 2015 reforms came into force.

It provides data to support policy analysis around questions like:

  • [image] Supporting researchHow clear and responsible is lender advertising?
  • How clear and responsible is lender advertising?
  • What are lenders’ fees and interest rates, as disclosed on their websites?
  • What kinds of content and themes are present in lender advertising?
  • What is the number (and turnover) of lenders since 2015?
  • What proportion of lenders are complying with registration and disputes resolution registration requirements?

Background

In December 2017, the Minister of Commerce and Consumer Affairs requested MBIE to conduct a review of the 2015 amendments to the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

The purpose of the Review is to assess progress to date of the 2015 reforms – in particular whether there is:

  • better informed decision making for consumers
  • reduced predatory and irresponsible lending
  • increased lender compliance with legal requirements.

The following reforms came into force in 2015:

Thematic area

Topics

Responsible lending

  • Advertising, and requirement to publish costs of borrowing
  • Obligations to:
  • ensure borrower can repay loan without substantial hardship
  • ensure credit will meet borrower requirements
  • assist with informed decisions
  • treat borrowers, guarantors and their property reasonably and ethically
  • Responsible lending requirements, including around oppression

Penalties and enforcement

  • New, increased penalties
  • Strengthened incentives to register on the Financial Service Providers Register

Repossession

  • New repossession requirements

Other lender obligations

  • Improved disclosure requirements
  • Extended cooling-off period
  • Minimum repayment warnings on credit card statements
  • Further unforeseen hardship obligations