This page was updated2 months ago
If you provide credit to consumers you must follow New Zealand consumer credit laws.
A consumer credit contract is a contract between a consumer and a lender. If you provide a mortgage, credit card, arranged overdraft or personal or cash loan – you have probably entered a consumer credit contract.
If you provide credit, consumer leases, or operate buy-back schemes, consumer credit law applies to your business.
There have been a number of changes to credit laws since 2019 which are set out in the timeline below.
If you (as a sole trader) or your company is a provider of consumer credit (lender), including through a pawnbroking contract, consumer lease, a BNPL contract (buy now, pay later contract), or are a mobile trader, and you are not already licenced or authorised by the Financial Market Authority or Reserve Bank of New Zealand, you must be certified under Part 5A of the Credit Contracts and Consumer Finance Act 2003 by the Commerce Commission.
From 1 December 2021, directors or senior managers of a consumer credit provider and/or mobile trader selling goods on credit need to comply with the due diligence duty.
If you are a lender, this page will help you understand your obligations in relation to your advertising.
If you lend to consumers or take security over consumer goods you must make your standard form contract terms and costs of borrowing for certain loans available publicly.
You must provide key information to borrowers before a loan is entered into, and at certain times during its life.
There are rules about how you can calculate and charge a borrower interest or default interest.
When you lend money, the Credit Contracts and Consumer Finance Act has rules you must follow when setting your fees.
When providing consumer credit lenders must comply with the lender responsibility relating to suitability.
When providing consumer credit lenders must comply with the lender responsibility relating to affordability.
When providing credit, you must ensure you comply with the lender responsibility principles. The lender responsibility principles impose obligations on lenders when advertising, before entering into a loan, and during all subsequent dealings with borrowers and guarantors.
When you make changes to a consumer credit contract, there are rules around what information you must give to the borrower, and when and how you must provide it.
If a borrower makes a hardship application, you are required to consider it and follow a specific process.
There are rules lenders or repossession agents must follow when repossessing goods.
A buy-back transaction is where a homeowner transfers their home (or an interest in their home) to a transferee, who typically pays their debts or gives them money. The former homeowner has the right to continue living in the home and to buy it back at some time in the future.
If you are in the business of leasing goods to consumers for their personal or household use, you may have to comply with credit laws.
If you provide high-loans, there are specific rules that you will need to comply with from 1 June 2020.
It does not matter how a loan is made – whether it is online, in person, on the phone or by text or email, the lender responsibility principles apply.
The Commerce Commission and the Financial Markets Authority (FMA) have collaborated on messaging around supporting customers.
Lenders must provide an annual return to the Commission containing information about loans entered during the year.
From 2 September 2024, Buy Now Pay Later lenders will need to comply with all the obligations of a lender under the Credit Contracts and Consumer Finance Act 2003 (the Act) and the Credit Contracts and Consumer Finance Regulations 2004 (the Regulations), unless an exemption applies.
The Self-reporting Guidance for Lenders is intended to help lenders understand the process to follow when reporting potential breaches of the Credit Contracts and Consumer Finance Act 2003 and/or Fair Trading Act 1986 and the consideration that will be given to the self-report by the Commission.
