New lending rules delayed
Car dealers and finance and insurance companies have been given an extra two months to get to grips with upcoming changes to laws governing credit contracts and consumer finance.
The new regulations were due to be introduced from October 1 but have now mostly been pushed back by the government until December 1 because of the community outbreak of the Covid-19 Delta variant.
Stakeholders have been advised by the Ministry of Business, Innovation and Employment (MBIE) of the delay to introducing new obligations under the Credit Contracts Legislation Amendment Act 2019 and the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020.
The amendments will update the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to prescribe minimum standards for lenders’ assessment of suitability and affordability of loans.
MBIE notes the government remains committed to implementing the credit reforms in a timely manner for the benefit of consumers.
It says postponing the amendments is necessary “due to the impact of recent Covid-19 alert levels on lenders’ implementation of the reforms, which has disrupted training and other preparations and forced a reprioritisation of resources to support existing customers”.
The requirements for creditors and mobile traders to receive certification by the Commerce Commission that their directors and senior managers are fit and proper persons for their roles will still come into force on October 1.
However, the due diligence duties on directors and senior managers will be delayed by two months.
Reforms under the amendment act that have already kicked in over the past 18 months include increased penalties and statutory damages for breaches of responsible lending obligations, interest and fee caps on high-cost consumer credit contracts, and all mobile trader contracts are treated as consumer credit contracts.
MBIE advises the Responsible Lending Code will be updated to reflect the changed start date for the new laws and the Commerce Commission will also be updating its guidance.
