Big Changes in Store for Consumer Credit

In September 2002 a new bill was introduced to parliament which will bring sweeping changes to the way we do business. If the Consumer Credit Bill becomes law, here are just some of the changes that could affect you.

• The Credit Contracts Act 1981 and Hire Purchase Act 1971 will be repealed.
• Lenders will not be required to make disclosure to commercial borrowers at all.
• The need for disclosure to private individuals will be extended to all credit contracts.
• Borrowing for investment will not be covered.
• Continuing disclosure will be required for nearly all credit contracts to non-commercial borrowers.
• Up front disclosure requirements will be more rigorous but documentation of the ‘finance rate’ is taken out.
• A three day right to cancel will follow disclosure, but that disclosure can be challenged for both technical compliance and general effectiveness.
• Interest for any day can only be charged if that day has ended.
• The lenders ability to claim establishment fees and the like will be conditional on those fees being a “reasonable” process cost.
• Some leases over 4 months will be caught by the new credit law.
• Lenders, merchants, landlords and other who provide credit still have time before the Bill becomes law to plan ahead to ensure their practices, forms and documents comply.