Draft lending code issued

The government has published its draft responsible lending code as part of its work on the loan-shark laws. Commerce and Consumer Affairs Minister Paul Goldsmith says the guidelines aim to protect borrowers without imposing unnecessary compliance costs on finance providers already lending responsibly. “We want our most vulnerable to have better access to information, and better protection from predatory practices of loan sharks and unscrupulous pay-day lenders when taking on debt,” he says. The code will not be binding, but compliance will be viewed as evidence of meeting lender responsibility principles set out in the Credit Contracts and Consumer Finance Amendment Act (CCCFA). Goldsmith says the code is intended to promote best practice in terms of the processes lenders follow to comply with those principles. The government views developing the code as essential to implementing reforms made to the Credit Contracts and Consumer Finance Act earlier this year. They aim to promote fair, efficient and transparent credit markets, and promote competition, consumer choice and protection. Goldsmith says: “Achieving the right balance between consumer protection and industry flexibility is a difficult balancing act. I will be listening to feedback from interested groups. I intend to issue a final code in March to give lenders time to adjust processes, if needed, before it comes into force in June 2015. “We know most lenders already act responsibly when lending money. However, a percentage still engages in irresponsible or predatory practices that may put customers in difficult situations. The act and code will look to curb those practices.” The Ministry of Business, Innovation and Employment wants submissions by 5pm on December 23. Click here to view the draft code.  The next issue of Autofile magazine will cover the CCCFA in more detail. Click here to subscribe online.