The Credit Contracts and Consumer Finance Act 2020 (CCCFA) is a law governing consumer credit in New Zealand. It was passed in August 2020 and became effective on October 1st, 2021. The law is designed to protect consumers from unfair lending practices and ensure that credit providers operate responsibly.
The CCCFA sets out guidelines for responsible lending, disclosure and transparency in credit contracts, and dispute resolution. It applies to all types of consumer credit, including personal loans, credit cards, hire purchase, and payday loans.
One of the most significant changes introduced by the CCCFA is the requirement for lenders to carry out a thorough assessment of a borrower`s ability to repay the loan. This means that lenders must take into account a borrower`s income and expenses when deciding whether to approve a loan. Lenders must also ensure that the loan is affordable for the borrower over its term.
The CCCFA also requires lenders to provide clear and concise information about the loan, including the total amount to be repaid, the interest rate, and any fees and charges. Lenders must also provide information about the borrower`s rights and responsibilities, including their right to cancel the loan within a certain timeframe.
Another provision of the CCCFA is the requirement for lenders to provide an affordable repayment plan for borrowers who experience hardship during the loan term. This includes situations where a borrower loses their job or experiences a significant change in income.
The CCCFA also includes provisions for dispute resolution, which require lenders to have a complaints process in place for borrowers who are unhappy with the service they have received. If a dispute cannot be resolved between the lender and the borrower, the matter can be referred to the Dispute Resolution Scheme.
Overall, the Credit Contracts and Consumer Finance Act 2020 is a significant step forward in protecting New Zealand consumers from unfair lending practices. It provides clear guidelines for lenders to operate responsibly and ensures that borrowers have the information and support they need to make informed decisions about their credit. If you are considering taking out a loan, it is essential to read and understand the terms and conditions of the loan agreement, including the interest rate, fees and charges, and repayment terms.
