This note is not part of the regulations, but is intended to indicate their general effect.
These regulations, which come into force on 6 June 2015, prescribe matters necessary to the operation of new obligations and responsibilities introduced by amendments to the Credit Contracts and Consumer Finance Act 2003 (the CCCFA) made by the Credit Contracts and Consumer Finance Amendment Act 2014. The regulations also provide for certain exemptions from the application of certain provisions of the CCCFA.
Publication of costs of borrowing information
Regulation 4 prescribes the costs of borrowing information that creditors must make publicly available pursuant to new section 9K of the CCCFA. That section requires every creditor—
to ensure that information about all the costs of borrowing in relation to every class of credit contracts offered by that creditor is publicly available; and
to display prominently and clearly on the creditor’s Internet site the credit fees, default fees, and annual rates of interest (and default interest charge rates) in relation to every class of credit contracts (if the creditor has an Internet site); and
to display prominently and clearly on any of its business premises that are accessible to the public a notice that a copy of the information about those credit fees, default fees, and rates is available on request (free of charge); and
immediately after receiving the request of any person, to supply a copy of that information, free of charge, to that person.
The information prescribed by regulation 4 is based on that prescribed by Schedule 1 of the CCCFA as the information that must be disclosed to individual debtors, but is tailored to reflect the fact that key information relates to a specific borrower entering into a particular contract, while costs of borrowing information is intended to ensure creditors publish generic information about credit products so that consumers can compare the different products easily.
Credit card minimum repayment warning
Regulation 5 prescribes the credit card minimum repayment warning that continuing disclosure statements for credit card contracts are required to contain under amended section 19 of the CCCFA.
Proportionate rebate formula
Regulation 6 prescribes the proportionate rebate formula to be used to calculate the portion of the consideration paid for a repayment waiver and an extended warranty that must be applied to reduce the amount required for full prepayment, according to section 51 of the CCCFA.
Regulation 7 gives exemptions in relation to “VTR schemes”. In general terms, these are schemes run by local authorities under which credit may be provided to a ratepayer to fund work on a rating unit for the ratepayer’s benefit. The credit contract is administered through the rates system.
New regulation 18(1) sets out the following 2 requirements that must be met in relation to a credit contract for it to be exempted:
the contract provides for a local authority to provide credit in connection with the funding of an activity on a rating unit. See section 6 of the CCCFA for the definition of credit. New regulation 18(6) defines local authority by reference to section 5 of the Local Government (Rating) Act 2002 (the LG(R)A 2002). New regulation 18(6) defines rating unit by reference to the Rating Valuations Act 1998. Generally, any parcel of land for which there is a certificate of title is a rating unit (see sections 5B and 5C of the Rating Valuations Act 1998). Rates set by local authorities under the LG(R)A 2002 are set by reference to rating units:
the contract provides that the creditor is to collect the amounts payable under the contract to the creditor by means of a targeted rate on the rating unit. New regulation 18(6) defines targeted rate by reference to section 16 of the LG(R)A 2002. Under that section, a targeted rate may be set by a local authority for specific activities identified in the authority’s funding impact statement and need not be set in relation to all rateable land in the authority’s district.
New regulation 18(2) lists the provisions of the CCCFA from which an exemption is given. All the provisions are contained in Part 2 of the CCCFA, which regulates consumer credit contracts (see subpart 1 of Part 2). The provisions are as follows:
section 18, which requires the creditor under a consumer credit contract to disclose certain information to the debtor at least once every 6 months. New regulation 18(4) makes this exemption subject to the condition that the creditor discloses the required information at least once every 12 months:
section 38, which provides that a creditor under a consumer credit contract must not require the payment of, or debit, an interest charge at any time before the end of the day to which the interest charge applies:
section 41, which provides that a consumer credit contract must not provide for unreasonable credit or default fees. This exemption applies only in relation to default fees:
section 51, which limits the amount that may be required for the full prepayment of a consumer credit contract:
subpart 8 of Part 2, which gives a debtor under a consumer credit contract rights to request changes to the contract if the debtor is suffering hardship as a result of, for example, illness or loss of employment. New regulation 18(5) provides that this exemption applies only if the local authority that sets (or is to set) the targeted rate has a rates remission policy adopted under section 109 of the Local Government Act 2002 or a rates postponement policy adopted under section 110 of that Act. A local authority with a rates remission policy may remit rates on a rating unit under section 85 of the LG(R)A 2002 and a local authority with a rates postponement policy may postpone the requirement to pay rates on a rating unit under section 87 of the LG(R)A 2002. New regulation 18(5) requires the adopted policy to have an objective of assisting ratepayers whose ability to pay their rates is impaired because they are in financial difficulty or an objective that is substantially the same as that objective.
New regulation 18(1) and (2) is supplemented by new regulation 18(3), which provides that the exemptions do not apply in certain circumstances.
Model disclosure statements
Regulation 8 prescribes updated forms for the model disclosure statements to reflect new initial disclosure obligations and timeframes that are prescribed by the amended CCCFA, pursuant to amended section 17 of the CCCFA.
Statement of reasons
The following statement of reasons is published for the purposes of section 138(1B) of the Credit Contracts and Consumer Finance Act 2003.
The Minister of Commerce and Consumer Affairs, having had regard to the purposes of the Credit Contracts and Consumer Finance Act 2003 set out in section 3 of that Act as required by section 138(1A)(a) of that Act, and being satisfied as to the matters set out in section 138(1A)(b) and (c)(ii) of that Act, considers the exemptions given by regulation 7 of these regulations to be appropriate because—
the provisions of the Act from which the exemptions are given overlap with similar requirements set out under local government legislation; and
exempting VTR scheme providers from these provisions is unlikely to cause detriment to debtors as local government legislation provides sufficient protections for debtors in each case. The purposes of the Act to protect the interests of consumers and promote their confident and informed participation in markets for credit will continue to be met; and
requiring VTR scheme providers to comply with the overlapping requirements of the Act and local government legislation would require councils to comply with onerous and burdensome requirements. Councils would have to change the way they administer VTR schemes to comply, which would result in unnecessary compliance costs that may be passed on to borrowers.
Regulatory impact statement
The Ministry of Business, Innovation, and Employment produced regulatory impact statements in January 2015 to help inform the decisions taken by the Government relating to the contents of this instrument.
Copies of these regulatory impact statements can be found at—