The Commerce Select Committee has reported back on the Credit Contracts and Financial Services Law Reform Bill with a number of recommended amendments to the Bill. A copy of the committee’s report is available here.
The Bill amends the entire suite of legislation which governs credit contracts. It introduces the concept of responsible lending to New Zealand credit legislation through amendments to the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and introduces a number of new consumer protection provisions in that Act. It also makes a number of major changes to the law governing repossession of consumer goods under an expanded CCCFA. A small amendment is made to the Personal Property Securities Act 1999, and the Bill also amends the Financial Service Providers (Registration and Dispute Resolution) Act 2008.
The Committee recommends a number of amendments to the lenders’ responsibility principles in the Bill and to the “Responsible Lending Code” which provides guidance and elaborates on the lenders’ responsibility principles. These include:
- clarifying that lenders’ responsibility principles do not apply to consumer leases;
- providing detail on how the lenders’ responsibility principles would apply to guarantees and the treatment of guarantors;
- where a lender arranges credit-related insurance, ensuring that such lenders are subject to relevant lender responsibility principles but removing “insurer” from the definition of “lender” so that insurers are otherwise not subject to the lenders’ responsibility principles; and
- amending provisions to provide for the Responsible Lending Code to be prepared in advance so that it is ready to come into force at the same time as the lender responsibility principles.
The Committee also makes a number of recommendations for the proposed disclosure requirements, fees and charges and repossession provisions.
The Bill is expected to have its second reading next week.