New consumer credit laws to come into force this week

Minister of Commerce and Consumer Affairs Paul Goldsmith welcomes new rules that will better protect borrowers taking effect from Saturday 6 June.

“A new era in consumer lending begins this Saturday where all lenders must meet responsible lending obligations and consumers have access to better information to help them make better borrowing choices,” Mr Goldsmith says. 

“The Credit Contracts and Consumer Finance Amendment Act comes into force on 6 June 2015. It gives greater protection to consumers when they’re borrowing money and helps ensure they can afford to repay the money they are borrowing.

“The law introduces harsher penalties for lenders who don’t follow the rules which the Commerce Commission will enforce.

“Our intention is not to impose unnecessary compliance costs on lenders who are already lending responsibly, but rather provide additional protection from lenders who engage in predatory practices. 

Some of the key changes in the reforms include:

• Lenders must comply with new responsible lending obligations and those that repeatedly breach the new law can be banned from lending.
• Lenders will need to make information about their fees and interest rates publicly available, making it easier for consumers to compare rates and fees before borrowing money.
• Repossession agents will need to be licensed and there are new rules prohibiting repossession of essential household items such as beds and heaters.
• Credit card billing statements must include a minimum repayment warning.

“The Credit Contracts and Consumer Finance Amendment Act and regulations will help to increase confidence in the role consumer credit plays in our financial markets, which is a key component of the Government’s Business Growth Agenda,” Mr Goldsmith says.