Holistic approach on credit industry supported
The New Zealand Law Society says it supports the approach of the Law Commission to regulation of the credit industry, and believes all obligations should be included in one piece of legislation.
In its comments to the Law Commission on the Commission’s Review of the Credit (Repossession) Act 1997 issues paper, the Law Society says it is unfortunate that the review is isolated from a review of the Credit Contracts and Consumer Finance Act 2003 (CCCFA).
It is particularly unfortunate that the review does not include the suggestion that lenders should be required to ask consumers to declare their ability to make repayments in relation to each credit contract entered into.
“Due diligence before the contract is made would reduce the risk of repossession,” the Law Society says. “A further point is that the hardship provisions of the CCCFA should be able to seamlessly co-ordinate with the severe remedy of repossession.”
The Society’s submission says it agrees that the Credit (Repossession) Act 1997 should be incorporated into the CCCFA.
“By way of example, when the CCCFA came into force in 2005, the Commerce Commission published an excellent guide for the credit industry. However, that guide made no mention of the Credit (Repossession) Act which of course fell outside the Commerce Commission’s brief. A further example is the lack of detail about repossession in the CCCFA disclosure statements.”
The Law Society says that from the perspective of the finance industry, it is important to have all of the obligations encapsulated in one statute.
“The Law Commission’s holistic approach is supported,” it states. “Credit repossession is inextricably linked with other enforcement activities under the CCCFA. The Law Society therefore is of the view that the Credit (Repossession) Act should form part of the CCCFA, either as a separate Part or as a schedule.”