New Zealand Law Society - Proposed changes to CCCF Act announced

Proposed changes to CCCF Act announced

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The Government has announced changes to the Credit Contracts and Consumer Finance Act 2003, including an interest rate cap on high-cost loans.

Following a MBIE review of the Act, the Government has revealed a number of changes to the legislation.

Interest and fees on high-cost loans will be limited to 100% of the amount borrowed.

There will be clearer responsible lending requirements, to increase compliance. This includes prescriptive requirements for affordability and suitability tests, to make it simple for lenders to comply, and new rules about disclosure and advertising. If a lender advertises in a particular language, they will also have to provide the loan disclosure documents in that language.

There will be tougher penalties for breaking the law, including irresponsible lending. Directors and executives of consumer credit lenders will be required to meet a "fit and proper person" test before the creditor can be registered on the Financial Service Providers Register. There will also be increased duties on directors and executives to ensure that lenders comply with their obligations.

Mobile traders will need to pass a "fit and proper person" test and register on the Financial Service Providers Register. A change in the law will also make "Do not knock" stickers legally enforceable.

Lenders will be required to prove that their fees are reasonable, if the Commerce Commission asks them to do so.

The Government also intends to ensure that key loan information is required to be shared with debtors at the start of debt collection activity.