There are rules lenders or repossession agents must follow when repossessing goods.
When do repossession rules apply
The repossession rules apply:
if your business has taken an interest in consumer goods to secure a consumer credit contract
you have the right to repossess the goods and/or a right to enter premises to repossess or inspect them, and
the borrower is in default or the goods are at risk.
Only consumer goods specifically identified in the consumer credit contract can be repossessed. There are also restrictions on taking security over, and repossessing, certain household necessities and some important documents.
What cannot be repossessed?
You can not take a security interest in essential items such as:
cooking equipment (including stoves)
The exception is when the goods are the subject of a Purchase Money Security Interest (PMSI) – this is when the money was borrowed to buy those particular items.
You can not take security or repossess the following kinds of important documents:
You (or any repossession agent you engage) must comply with the Lender Responsibility Principles when carrying out repossession. This means you must:
exercise the care, diligence and skill of a responsible lender
comply with specific lender responsibilities set out by law, such as:
not exercising a right or power over the borrower in an oppressive manner
meeting all your legal obligations as a lender
treating a borrower and their property reasonably and in an ethical manner, including:
taking all reasonable steps to ensure goods and property are not damaged during the repossession process
making sure repossessed goods are adequately stored and protected
exercising your right to enter the property a reasonable manner.