Many legal minds making NZ LAW work

We are an association of independent legal practices, proactively sharing ideas and expertise for the benefit of our clients.

Focus on Lender Responsibility for Consumer Credit

Published: 27th January 2017

Author: AJ Ekmescic, Corcoran French

Published in: Commercial e.Speaking | Issue #45

Changes to the Credit Contracts and Consumer Finance Act 2003

The new Credit Contracts and Consumer Finance Amendment Act 2015 (CCCFA Amendment Act) which came into full effect in mid-2016 has tightened rules and regulations for lenders that are affected by the Credit Contracts and Consumer Finance Act 2003 (CCC FA). There is a greater focus on lender responsibility and accountability such as firmer disclosure requirements and rules around cost recovery. We take a closer look at some key areas and what that could mean for you.

The CCCFA regulates the rights and responsibilities of lenders and borrowers in a consumer contract arrangement. A consumer, generally speaking, is someone who has entered into a credit contract for the purpose of household, domestic or personal benefit. The CCCFA Amendment Act has increased the lender responsibilities and regulation compliance under the CCCFA. The key changes are:

  • New lender responsibilities
  • The development of the Responsible Lending Code which sets out the new lending principles
  • More rigorous initial disclosure requirements by the lender before entering into a contract
  • Greater consequences as a result of failing to meet the initial disclosure requirements, and
  • Further restrictions for lenders on recovering costs from borrowers.

A closer looking a lender responsibilities to borrowers

From a borrower’s perspective, the amendments under the CCCFA Amendment Act mean better protection and parameters for lending in terms of fair interest rates, disclosure and rights of recovery. These are incorporated into the new Responsible Lending Code. A lender must take extra care when disclosing a credit contract to a borrower to ensure all the relevant details are explained in a simple and understandable manner. This extra level of care does not only apply in a loan situation, but it also affects credit-related insurance contracts, guarantees and buy-back transactions.

As a borrower you need to be aware that a lender’s responsibility is to assist you, and any guarantors in making informed decisions throughout the term of the credit, to act ethically and ensure the contract is not oppressive in nature. The latter is especially true for any loan sharks wanting to charge higher than usual interest rates – if you think the interest rate is too high, do not sign the contract and get some professional advice.

Disclosure requirements and implications

The new section 99(1A) of the CCCFA Amendment Act has further restricted lenders from recovering costs from a borrower where initial or ongoing disclosure has not been completed in accordance with the legislation. Costs for borrowing are defined under the CCCFA and CCCFA Amendment Act as interest charges, credit fees and default fees under a consumer credit contract. The new section requires lenders to disclose all information, including any unexpected costs that have, in some instances, been glossed over in the past.

The new section goes one step further than its predecessor in that a lender may no longer recover costs for any period of time during the credit contract where disclosure had been incorrectly completed. This is yet to be tested in court; however we expect to see lenders having to update internal practice and educate staff in order to comply with the new legislation. Lenders who discharge their obligations by automatic online lending approvals will need to be particularly vigilant. Borrowers need to question any unexpected costs that arise.

Conclusion

The Commerce Commission has made it clear that the rights and obligations set out in the CCCFA Amendment Act are mandatory for all lenders. Proactive steps have been taken by the Commission to enforce regulations; this was demonstrated in a recent case[¹] where the lender was ordered to pay $135,000 for a breach of disclosure requirements under the CCCFA and CCCFA Amendment Act.

Whist the changes are focused on greater consumer protection leaving little room for omissions by lenders, borrowers need to be well informed and understand what they are signing. If it looks like a shark is lurking, get professional advice straight away.

[¹] R v Smart Shop Limited [2016] NZDC 1937

Related Articles

  • Auckland
  • Bay of Plenty
  • Canterbury
  • Coromandel
  • Gisborne
  • Hawke's Bay
  • Kapiti Coast
  • Manawatu - Wanganui
  • Marlborough
  • Nelson
  • Northland
  • Otago
  • Southland
  • Taranaki
  • Waikato
  • Wairarapa
  • Wellington
  • West Coast

Duncan King Law

Led by the firm’s director Kristine King, and John Ray who operates in a consultancy role, the dedicated team represents some of the most talented lawyers and legal executives in Auckland.

Although their primary focus is on Property, Commercial and Trust law the wide skillset of their team, and their vast experience in almost every aspect of the law, means they are uniquely qualified to provide advice to their varied clientele, regardless of what their legal requirements may be.

Region: Auckland

Phone: 09 623 0515

Attewell Clews & Cooper

Attewell Clews & Cooper is one of Whakatane’s largest and longest standing law firms. Our team embrace a culture of relaxed professionalism and share a common goal to provide high quality legal advice that is both practical and understandable. 

We are committed to being at the top of our game to ensure that our clients receive accurate and up-to-date legal advice.  We understand the world is online and use fore-front technology to achieve greater productivity and efficiency.  We encourage contact via email and text message, use an online legal library, have an intuitive practice management system and encourage our clients to pay online.

It is important to us that we understand your business and your unique individual (and family) situation. We work hard to provide sound legal advice that is tailored to your business industry and your personal goals. You will see us out and about in the community supporting local businesses, schools, community and sporting events. Talk to us today to find out how we can help you.

Region: Bay of Plenty

Phone: 07 307 0570

Argyle Welsh Finnigan

Argyle Welsh Finnigan is a leading law firm in Ashburton,  the town servicing mid Canterbury, New Zealand.

The firm employs a team of over 25 legal professionals, including three Senior Associate Solicitors, three Staff Solicitors and five Legal Executives.  Our firm provides quality legal services with a commitment to our clients and to understanding their individual needs and requirements. 

With more than one hundred years of combined legal experience, we are able to offer prompt and professional advice on a wide range of legal matters.

Region: Canterbury

Phone: 03 308 8228

Purnell Lawyers

There is nothing as inevitable as change. Since opening for business early last century, we at Purnell Lawyers have seen many changes both in name and in the people who have made up the members of our team. We have been privileged to have served the public throughout all of these times. 

We are confident that we will continue to bring top quality legal services to our clients well into the future.

Region: Coromandel

Phone: 07 868 8680

Woodward Chrisp

At Woodward Chrisp we strive to meet the needs of our clients by providing a wide range of high quality legal services within a supportive and collaborative environment.

Woodward Chrisp is the amalgamation of two long established Gisborne legal firms: Woodward Iles & Co and Chrisp and Chrisp. Today’s partners are Ross Revington, Adam Simperingham, Jeff Allen and Ellie FitzGerald.

Region: Gisborne

Phone: 06 869 0900

NZ LAW Limited

NZ LAW Limited is an association of independent legal practices with member firms located throughout New Zealand. There are currently 53 member firms practising in a wide range of legal disciplines ranging from business law, home buying and selling, immigration law and intellectual property to aviation law and viticulture.

The group was established in 1992 when about five law firms met in Auckland to find a way to benefit their clients by replicating the conviviality and the sharing of ideas and expertise that occurs in larger law firms, but still be able to retain client confidentiality and their own independence.

Region: Hawke's Bay

Phone: 06 835 5299

BMC Lawyers

BMC lawyers has built a reputation for providing quality service and delivering real results. Our strength is our broad-ranging legal experience that gives us the ability to match clients with the right mix of legal skills for their particular needs.

Our legal professionals are passionate about what they do and work alongside a talented team of support and administration staff to make a real positive difference to our clients.”

Region: Kapiti Coast

Phone: 04 296 1105

Dorrington Poole

Dorrington Poole Lawyers has a long tradition in Dannevirke and was founded in 1914 by Percy Dorrington. The firm still acts for families of some of the earliest clients. The long term relationship with those clients gives continuity in a fast changing world.

The firm provides quality legal services within New Zealand for its rural, commercial and private clients. We provide services for clients not only in the Southern Hawkes Bay/Tararua area but also throughout the country.

Region: Manawatu - Wanganui

Phone: 06 374 7089

Wain & Naysmith

Based in Blenheim, Wain & Naysmith Lawyers is a full service law firm, and a powerhouse for property, family and business law.

We pride ourselves in providing clear and cost effective legal solutions and practical advice for you, your family and your business.

Region: Marlborough

Phone: 03 520 6103

Knapps Lawyers

As a firm, we promise to look after you and treat you in a manner that we would expect to be treated by a professional services provider; we promise to use every available legal remedy available to us to resolve your issue and to do what you ask us to do in a timely manner.

We will hold in strict confidence all information that we acquire through our work for you and which concerns your business or personal information.  The only exceptions are where you authorise us to disclose such information or where we must do so by law.

Region: Nelson

Phone: 03 544 7888

Law North Limited

We pride ourselves on being a "general store" for most legal issues but also have several in-house experts in specialised areas including trusts, relationship property, business and property law.  No matter what your issue is - whether you are looking for trusted legal advisers to steer you through life, or you have a one-off problem to sort out - we would be pleased to help.

Law North Ltd provides a broad range of legal services across the Far North district from our base in Kerikeri.   We have operated in the area for over 100 years and have a long-standing history of providing legal services to a diverse client base, including businesses and private clients.   Our directors and their families have been part of the Bay of Islands community for several generations and remain committed to the area and its people.  We often call upon strong local knowledge to resolve issues for clients whilst remaining vigilant about client confidentiality.

Region: Northland

Phone: 09 407 7099

Mactodd

MacTodd is a leading South Island law firm with a national reputation for its experience and expertise across a wide range of the law.

Serving the local community and national and offshore clients for over 40 years, MacTodd prides itself on being a fully comprehensive law firm with an innovative approach, meeting the demands and time zones of its diverse clientele.

MacTodd's hallmark is our friendly and professional approach. Our state-of-the-art technology provides an accurate, efficient and cost-effective service.

Region: Otago

Phone: 03 441 0125

Cruickshank Pryde

We are proud to provide a full suite of legal services to the regions of Southland and Central Otago. With our offices, located in Invercargill, Gore and Queenstown, equipped with the latest modern technology, we can service wider New Zealand and international clients with ease. Our areas of expertise include commercial, rural, business, employment, family, criminal, property, resource management and estate planning law.

Region: Southland

Phone: 03 214 4069

Welsh McCarthy

Welsh McCarthy practises in Hawera, South Taranaki. Predominant industries in the South Taranaki district are dairy farming, oil and gas. The South Taranaki area also has the largest one-site multi product milk processing facility in the world

We deal with company and commercial transactions, commercial and family law, farm and residential sales and purchases, estate planning and family and charitable trusts. A large part of the firm also deals in the area of family law.

Region: Taranaki

Phone: 06 278 5039

Norris Ward McKinnon

We are the Waikato’s leading provider of specialist legal services with a national and international perspective.

We provide tailored legal advice to meet the diverse needs of large and small corporates, public institutions, small and medium businesses, individuals and families.

We know that choosing a law firm is not an easy task. We work with our clients to listen, reassure, and resolve their problems simply and cost effectively. From our experience, the best way to do this is through developing understanding and long-term relationships with our clients. Our team of lawyers are highly regarded with a depth of experience that gives them the credibility that underpins Norris Ward McKinnon’s solid reputation in the legal market. Put simply, they are real people dealing with the real issues that affect our clients day-to-day.

Region: Waikato

Phone: 07 834 6000

Gawith Burridge

Gawith Burridge traces its history back to 1875 when Charles Gawith first set up his practice. Since then the firm has undergone many changes, including a merger between Gawith & Co and Burridge & Co in 1998 to form our current practice.

Our firm draws on the breadth of expertise available from some of the region’s most senior legal practitioners, as well as the skills of those who have moved here from larger corporate environments.

As a result, we provide clients with a comprehensive range of legal services right here in the Wairarapa. We can provide you with legal assistance whether you are an individual or a company, with everything from setting up a Will to selling your farming business. 

Region: Wairarapa

Phone: 06 370 0000

Greg Kelly Law Ltd

Greg Kelly Law Limited is a boutique Wellington law firm specialising in trust and elder law. Our practice areas are wills, estates and trusts.

We act for private and institutional clients establishing and administering trusts, wills and estates. We also provide quality advice to legal and accounting firms in New Zealand and overseas. In particular, we can assist with legal opinions, obtaining and resealing probate, and estate and trust litigation.

Region: Wellington

Phone: 04 499 5193

Hannan & Seddon

The Law Firm of Hannan & Seddon dates back to September 1867.

The firm's offices were in Werita Street from 1867 until 1982 when the firm moved to Tarapuhi Street and then to its current spacious premises at 61 Guinness Street in 1998.

The name Hannan comes from Mr Michael Hannan whose son John Hannan (Jack) joined the firm in 1908. Jack Hannan remained in partnership until he passed away in 1974 at the age of 90!

The name Seddon comes from Mr T E Y Seddon (son of Premier Richard John Seddon from Kumara) who joined the firm in the 1920's. The other prominent Solicitor at Hannan & Seddon was Cyril McGinley who joined the firm in the late 1920’s and retired as a Consultant in 1997 aged 87.

Currently we have two Partners within our firm. Tony Sullivan who has been with us for 29 years and Colin Smith, 26 years. The firm also has two long serving Legal Executives Elaine Knowles and Beverley Walsh.  

Region: West Coast

Phone: 03 768 4169

All the information published on this website, or in any article herein is true and accurate to the best of the authors' knowledge. Information on this site should not be a substitute for legal advice. No liability is assumed by NZ LAW Limited, or individual NZ LAW member firms for losses suffered by any person or organisation relying directly or indirectly on information published on this site. Views expressed in any article are the views of the authors individually and do not necessarily reflect the view of NZ LAW or their member firms. Information appearing on this site may only be reproduced with prior approval from NZ LAW Limited Head Office, and credit being given to the source. © NZ LAW Limited