Credit Contracts and Consumer Finance New Zealand

Financial institutions that operate in New Zealand have specific obligations when it comes to lending money or providing security to borrowers.

GRC Solutions has recently developed a two-module Credit Contracts and Consumer Finance course which will help your financial institution comply with obligations under the Credit Contracts and Consumer Finance Act (CCCFA).

This Act sets the parameters for lending money that ensure borrowers make informed choices and lenders act responsibly. It protects borrowers when they take out a loan, use a credit card, borrow money on an agreed overdraft or join a hire-purchase agreement.

If lenders are required to act responsibly, what does this look like?

Our course will help your institution understand what your obligations are. As a lender, you are bound by the responsible lending principles. These include assisting borrowers in reaching informed decisions, making reasonable inquiries about a borrower and their objectives, and dealing with situations of substantial hardship.

You also owe obligations to guarantors and are required to treat them reasonably and ethically.

Oppression is a major issue, covering anything that is harsh, unjustly burdensome, unconscionable or in breach of reasonable standards of commercial practice. Your institution should not engage in oppressive conduct or draft oppressive contracts.
Equally important are the kinds of advertising your institution is allowed to engage in. It cannot be misleading, deceptive or confusing to borrowers.

The disclosure standards – governing how your institution makes and publishes disclosures of information – range in the stages and situations that they cover. From initial, continuous and request disclosures, to variation, dispute resolution and financial mentoring services disclosures, it is vital that your institution is committed to remaining as transparent as possible in their operations.

Moreover, repossession of secured goods is a key right that lenders have. It is crucial that this contractual right is exercised ethically, and our course will explain how this can be done. Due diligence duties to ensure compliance with the CCCFA in all aspects of your business’s activities is another area of significance.

In recognising the role that financial institutions play under the CCCFA, answerable to lenders, guarantors and ultimately, the Commerce Commission, this will ensure your institution acts as a responsible and ethical lender.

Find out more about the CCCFA NZ Course here.