Commerce Commission: Credit laws are changing
February 12, 2020
Good Shepherd NZ supports the changes in credit laws that are intended to reduce the harm caused by unmanageable, high-cost debt. The following summary of the changes has been provided by the Commerce Commission –
What you need to know
The law that protects you when you borrow money has been overhauled to provide greater protection against irresponsible lending.
There are lots of changes taking effect at different times. Some changes started on 20 December 2019, like the introduction of penalties for lenders who don’t lend responsibly (including contracts already in existence). A court can now order lenders to pay penalties of up to $600,000.
Another group of changes will take effect from 1 June 2020. Some of these changes include an interest rate cap and a number of new rules for lenders who offer high cost credit, like payday loans. High cost lenders will not be allowed to charge you more than 0.8% interest and fees per day for a loan. You’ll also never pay back more than double what you borrow, this means a loan for $200 should never exceed $400.
Another group of changes is set to take effect from 1 April 2021. All lenders who provide consumer credit will need to pass a ‘fit and proper person’ test before they offer credit to New Zealanders. Debt collectors on loans will need to give you certain information about the debt. You will also be able to ask a lender for a free copy of their assessment of your ability to repay your loan.
You can read about the changes to the Credit Contracts and Consumer Finance Act in more detail on the Commerce Commission’s website.