Monday 2nd April 2012
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The government is cracking down on loan sharks, with the release of the draft Credit Contracts and Consumer Finance Amendment Bill, designed to protect consumers from irresponsible lenders.
Consumer affairs minister Chris Tremain will visit community and interest groups around New Zealand over the next six weeks to discuss the bill.
“These will be the biggest changes to consumer credit law in a decade,” Tremain said. “It is time for a significant shift in lending laws to increase protection for borrows and target irresponsible lenders.”
The changes include better controls against misleading, deceptive or confusing advertising, the complete disclosure of loan terms and an extension of the ‘cooling off’ period for borrowers to cancel their loan.
The government will also introduce a new code of responsible lending, meaning non-compliant lenders will be banned from the market. Borrowers will no longer have to pay interest or fees if lenders are not registered financial service provider.
Under the law it will also be illegal to lend money to someone whose loan repayments would likely result in substantial hardship.
In October, the Cabinet agreed to introduce tougher consumer credit laws after a financial summit in August looked at ways to tack irresponsible lending and greater penalties for unregistered lenders.
Once submissions on the draft bill have been considered the legislation will be finalised and introduced to parliament. It is hoped that the new legislation will be in effect by mid-2013.
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