Finance and Expenditure Committee reports back on Credit Contracts Legislation Amendment Bill

The Finance and Expenditure Committee provided its report on the Credit Contracts Legislation Amendment Bill (the Bill) this morning. The Committee has recommended that the Bill be passed with a variety of amendments, the most notable being:

• Amended timeframes for commencement, including extended timeframes for changes to the Lender Responsibility Principles and the new directors and senior managers liability regime to 1 April 2021. We note, however, that MBIE's consumer policy update this afternoon states that the commencement date for the director and senior manager liability regime is 1 June 2020.
• The removal of the proposed requirement that Schedule 1 disclosure be made available in all languages used by creditors in advertising – shifting the focus to ensuring that borrowers have the information necessary to make informed decisions.
• Amendments to the Lender Responsibility Principles, specifically requiring creditors to conduct affordability and suitability assessments each time a material change is made to the consumer credit contract.
• Flexibility for the Commerce Commission to extend deadlines for providing records in relation to affordability and suitability and fees (beyond the proposed 20-day requirement).
• Requiring creditors to disclose details of their dispute resolution scheme when dealing with hardship applications and complaints.
• A specific requirement that creditors review the reasonableness of their fees where there is a change that is likely to materially affect the reasonableness of the fee.
• New annual return requirements.
• Enabling courts to order creditors to disclose information or publish advertisements in respect of any breach of the CCCFA.
• Regulations to address repossession processes for consumer goods and the directors and senior managers liability regime for securitisation and covered bond arrangements.
• Changes to the proposed debt collection disclosure requirements.
• Further protections for consumers under high-cost credit contracts (including the introduction of a daily interest cap on high-cost credit contracts of 0.8%).

The Committee has not materially altered the proposed directors and senior managers regime or the proposed repeal of section 9C(7) (which currently enables creditors to rely on information provided by borrowers or guarantors unless there are reasonable ground not to).

The Bill will be presented for a Second Reading with the Committee's amendments before being referred to a Committee of the whole House.

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