COVID-19

The Commission has produced guidance to assist lenders to apply the provisions of the Credit Contracts and Consumer Finance Act 2003 during the time that the New Zealand economy is affected by COVID-19.

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What is a consumer credit contract

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.

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When consumer credit law applies to your business

If you provide credit, consumer leases, or operate buy-back schemes, consumer credit law applies to your business.

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Changes to credit laws

Credit laws are changing, it is important that you understand the changes to your obligations.

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Fit and Proper Person certification

If you or your company is a provider of consumer credit (lender) or 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 (CCCF Act) by the Commerce Commission.

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Due diligence duties for directors and senior managers

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.

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Advertising

If you are a lender, this page will help you understand your obligations in relation to your advertising.

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Publication of contract and cost of borrowing

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.

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Disclosure obligations

You must provide key information to borrowers before a loan is entered into, and at certain times during its life.

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Charging interest

There are rules about how you can calculate and charge a borrower interest or default interest.

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Consumer credit fees

When you lend money, the CCCF Act has rules you must follow when setting your fees.

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Assessing for suitability and affordability

From 1 December 2021, lenders providing consumer credit and mobile traders selling on credit need to comply with new regulations.

Regulations set out the types of inquiries that need to be made before agreeing to lend money to a borrower, or before agreeing to provide further credit under an existing loan. There are penalties for non-compliance and the Commission strongly recommends that lenders seek specialist legal advice to ensure they meet their obligations.

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Lender responsibility principles

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.

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Variations to consumer credit contracts

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.

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Hardship applications

If a borrower makes a hardship application, you are required to consider it and follow a specific process.

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Repossession rules

There are rules lenders or repossession agents must follow when repossessing goods.

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Buy-back transactions

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.

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Consumer leases

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.

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High cost loans

If you provide high-loans, there are specific rules that you will need to comply with from 1 June 2020.

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Lending online

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.

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