Credit Contracts and Consumer Finance Regulations 2004

Version as at 1 December 2021

Coat of Arms of New Zealand

Credit Contracts and Consumer Finance Regulations 2004

(SR 2004/240)

Silvia Cartwright, Governor-General

Order in Council

At Wellington this 9th day of August 2004

Present:
Her Excellency the Governor-General in Council

Note

The Parliamentary Counsel Office has made editorial and format changes to this version using the powers under subpart 2 of Part 3 of the Legislation Act 2019.

Note 4 at the end of this version provides a list of the amendments included in it.

These regulations are administered by the Ministry of Business, Innovation, and Employment.

Pursuant to section 138 of the Credit Contracts and Consumer Finance Act 2003, Her Excellency the Governor-General, acting on the advice and with the consent of the Executive Council, makes the following regulations.

Contents

1Title
2Commencement
2ATransitional, savings, and related provisions
3Interpretation
4Status of examples
4AAAPPurpose of regulations 4AAAQ to 4AAB
4AAAQAdvertising of payment amounts
4AAARAdvertising of interest rates or charges
4AAASAdvertising of credit fees if advertisement states there is no interest
4AAATProhibited advertising practices
4AAAURequirement for plain language in clear, concise, and intelligible manner
4AAAAdvertisements for high-cost consumer credit contracts: financial mentoring services
4AABAdvertisements for high-cost consumer credit contracts: risk statements
4APublication of costs of borrowing information
4BInformation about interest rates
4CInformation about charging interest
4DInformation about credit fees and default fees
4EMinimum repayment warning
4FDisclosure of agreed changes
4GDisclosure of changes following exercise of power
4HDisclosure of changes to guarantors
4AALender must collect and assess information
4ABAdditional requirements for certain waivers, warranties, and insurance
4ACPurposes
4ADOutline
4AEInterpretation
4AFGeneral rule: full income and expense estimates required in certain cases
4AGException to general rule if obvious no hardship
4AHException to general rules for certain variations and replacements of existing contracts
4AIGeneral rule in other cases
4AJLenders must estimate borrower’s likely income
4AKLenders must do initial estimate of borrower’s likely relevant expenses
4ALHow to calculate certain relevant expenses
4AMLenders must adjust initial estimate of borrower’s likely relevant expenses
4ANBenchmarkable expenses
4AOHigh-cost consumer credit contracts: presumption of substantial hardship
5Alternative publication requirements
5ADisclosure about dispute resolution and financial mentoring services: hardship applications, arrears, credit declined, and complaints
6Assumptions
6AHigh-cost consumer credit contracts for which costs of borrowing must not exceed loan advances
6BRate of charge
7Rebate of consumer credit insurance contract premium
7ARebate of repayment waiver
7BRebate of extended warranty
8Application of regulation 9
9Calculation of reasonable estimate of creditor’s loss if interest rate fixed for whole term
10Application of regulation 11
11Calculation of reasonable estimate of creditor’s loss if interest rate fixed for part of term
12Model disclosure statements
13Terms and conditions for use of model disclosure statements
14Format and layout may not be modified
15Other information
16Model disclosure statement may be divided into 2 parts
17Other key information
18Exemptions from provisions relating to consumer credit contracts where local authority to provide credit
18AExemption from enforcement prohibition [Revoked]
18BExemptions from provisions relating to repossession of consumer goods in cases involving motor vehicles
18CExemptions from disclosure requirements for peer-to-peer lenders
18DExemptions for banks for COVID-19 from provisions relating to consumer credit contracts
18EExemptions for non-bank lenders for COVID-19 from provisions relating to consumer credit contracts
18FExemption for credit under residential earthquake-prone building financial assistance scheme
18GExemption from disclosure about financial mentoring services
18HExemptions for insurance premium funding agreements
19Section 26A of Act not to apply if transfer made for purposes of securitisation or covered bond arrangements or similar arrangements
20Contract manager appointed by new creditor
21New creditor was contract manager before transfer
22Application of section 59B of Act in certain circumstances
23Disclosure before debt collection starts
24Fee for applications for certification
25Which changes in circumstances must be notified
26Fee for notifying changes in circumstances
27Exemption from certification if securitisation or covered bond arrangements or similar arrangements
28Exemptions if credit provided, on interim basis, by non-financial service business
29Requirements in relation to annual returns
Gazette Information
Notes

Regulations

1 Title

These regulations are the Credit Contracts and Consumer Finance Regulations 2004.

2 Commencement

These regulations come into force on 1 April 2005.

2A Transitional, savings, and related provisions

The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.

Regulation 2A: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

3 Interpretation

(1)

In these regulations, unless the context otherwise requires,—

fixed interest period means a period of a fixed rate contract for which a fixed interest rate applies

fixed interest rate means the rate of interest that is fixed for the term or any part of the term

fixed rate contract means a consumer credit contract that has a fixed interest rate

term, in relation to a fixed rate contract, means the period between the first advance made under the contract and the last payment anticipated by the contract.

(2)

In these regulations, unless the context otherwise requires, variables contained in formulae are calculated as at the date of full prepayment.

4 Status of examples

(1)

Every example used in these regulations is part of these regulations.

(2)

An example used in these regulations is only illustrative of the provision to which it relates. It does not limit the provision.

(3)

If an example and the provision to which it relates are inconsistent, the provision prevails.

Responsibility to ensure advertising complies with advertising standards

Heading: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4AAAP Purpose of regulations 4AAAQ to 4AAB

Regulations 4AAAQ to 4AAB apply for the purpose of section 9C(3)(b)(i) of the Act.

Regulation 4AAAP: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4AAAQ Advertising of payment amounts

(1)

This regulation applies if an advertisement is being distributed to the public, or a section of the public, and it refers to an amount of a payment under consumer credit contracts.

(2)

The advertisement must state,—

(a)

if ascertainable, the total amount of the payments (but only if the contract would, on the assumptions set out in Schedule 1, be paid out within 7 years of the date on which credit is first provided under the contract); or

Example

An advertisement says “Buy this TV for $30 a week”. It is a 3-year credit contract. The advertisement must also state that the total amount of payments will be $4,680.

(b)

in any other case, the annual interest rate or rates for the contracts covered by the advertisement (with the rate or rates being expressed in terms of a percentage).

(3)

The advertisement must also state, in the case of a credit sale that requires the debtor to make 1 or more lump sum payments (in addition to any regular payments, deposit, or trade-in allowance), the amount of each lump sum payment if ascertainable or, if not ascertainable, the method of calculating the amount.

(4)

Information referred to in subclauses (2) and (3) must be stated in a prominent manner.

Regulation 4AAAQ: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4AAAR Advertising of interest rates or charges

(1)

This regulation applies if an advertisement is being distributed to the public, or a section of the public, and it refers to an interest rate or an interest charge.

(2)

The advertisement must state—

(a)

the annual interest rate or rates for the consumer credit contracts covered by the advertisement (with the rate or rates being expressed in terms of a percentage); and

(b)

if the advertised rate or charge may vary from that advertised depending on the debtor’s risk, the range of the rates or charges (for example, that the rates may range between 20% and 30% depending on the debtor’s risk); and

(c)

if the contract provides for interest rates in addition to those referred to paragraphs (a) and (b), that other interest rates apply in addition to those rates; and

(d)

if an annual interest rate is fixed for part, but not all, of the term of the contract, the period during which the annual interest rate is fixed; and

(e)

if an annual interest rate is not fixed for the term, a statement to that effect; and

(f)

each mandatory credit fee; and

(g)

the amount of those fees if ascertainable or, if that amount is not ascertainable, that other fees apply; and

(h)

where information can be found on when other fees referred to in paragraph (g) apply and how they are calculated.

Example

A creditor that refers to an interest rate in an advertisement might include the following statement: “Interest 9.95%–24.95% per annum. Establishment fee $100.”

(3)

The annual interest rate or rates stated in the advertisement—

(a)

must be the rate or rates that are ordinarily available to debtors who meet the creditor’s borrowing requirements for the contracts covered by the advertisement; and

(b)

must be the current annual interest rate or rates, if the rate is not fixed; and

(c)

must be stated in a prominent manner.

(4)

This regulation does not require the advertisement to state matters in relation to default interest charges.

(5)

In this regulation and regulation 4AAAS, mandatory credit fees includes any establishment fees and regular account management fees, but does not include fees charged to a debtor for debtor-specific decisions or actions.

Regulation 4AAAR: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 4AAAR(2)(d): amended, on 1 December 2021, by regulation 5 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

4AAAS Advertising of credit fees if advertisement states there is no interest

(1)

This regulation applies if—

(a)

an advertisement states that there is no interest under a consumer credit contract; but

(b)

there are mandatory credit fees under the contract.

(2)

The advertisement must state the following:

(a)

each mandatory credit fee; and

(b)

the amount of those fees if ascertainable or, if that amount is not ascertainable, that other fees apply; and

(c)

where information can be found on when other fees referred to in paragraph (b) apply and how they are calculated.

(3)

The matters stated in subclause (2)(a) and (b) must be stated in a prominent manner.

Regulation 4AAAS: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4AAAT Prohibited advertising practices

(1)

An advertisement must not make any of the following representations, explicitly or by implication:

(a)

that the creditor will not inquire into the debtor’s circumstances (for example, “no credit checks”, “instant approval”, or “guaranteed acceptance”):

(b)

that the creditor will not take into account a debtor’s circumstances in assessing whether or not to enter into a consumer credit contract (for example, “bankrupt—OK”, “bad credit history—OK”):

(c)

that a loan has already been approved or granted, if the inquiries required by section 9C(3)(a) of the Act have not been completed (for example, “$500 credit available in your account”).

(2)

If an advertisement includes a reference to a speed of approval in minutes or hours, it must also contain a prominent reference to responsible lending criteria or inquiries (for example, “subject to responsible lending inquiries”, “affordability tests apply”, or “after responsible lending checks”).

Regulation 4AAAT: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4AAAU Requirement for plain language in clear, concise, and intelligible manner

The matters required to be stated in regulations 4AAAQ to 4AAB must be stated in plain language in a clear, concise, and intelligible manner.

Regulation 4AAAU: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Advertisements for high-cost consumer credit contracts

Heading: inserted, on 1 December 2021, by section 69(2) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

4AAA Advertisements for high-cost consumer credit contracts: financial mentoring services

(1)

This regulation applies to the following types of advertisement for a high-cost consumer credit contract:

(a)

the home page of the creditor’s Internet site:

(b)

any pages on an Internet site to which an advertisement links other than an advertisement on that Internet site:

(c)

print advertisements (for example, in newspapers, magazines).

(2)

The advertisement must disclose in a prominent manner the information about financial mentoring services described in regulation 5A(6) (disclosure about dispute resolution and financial mentoring services).

Regulation 4AAA: inserted, on 1 December 2021, by section 69(2) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

4AAB Advertisements for high-cost consumer credit contracts: risk statements

Every advertisement for a high-cost consumer credit contract must include a prominent statement that a high-cost consumer credit contract should not be used for long-term or regular borrowing, and is only suitable to address temporary, short-term cash needs.

Regulation 4AAB: inserted, on 1 December 2021, by section 69(2) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

Publication of costs of borrowing information

Heading: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

4A Publication of costs of borrowing information

(1)

This regulation applies for the purpose of section 9K of the Act.

General rules

(2)

The information required to be made publicly available (costs of borrowing information) must contain, for every class of credit contract offered by the creditor, the information prescribed by regulations 4B to 4D.

Rules about publication on Internet sites

(3)

To meet the requirements under section 9K(3)(a) of the Act,—

(a)

each part of the costs of borrowing information for a class of credit contracts must be presented with the other parts of the costs of borrowing information for that class of credit contracts in a form that enables a borrower to ascertain readily the total costs of borrowing (for example, interest rates and fees for a class of credit contracts may be presented together on the same webpage or with prominent links provided between them); and

(b)

the costs of borrowing information must be accessible at all reasonable times.

Rule when information supplied on request

(4)

Costs of borrowing information that is supplied to a requestor under section 9K(4) of the Act must include the date from which the information applies (for example, fees current as at [date]) or the date on which the information is supplied.

Regulation 4A: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

4B Information about interest rates

(1)

The costs of borrowing information must include—

(a)

the annual interest rate or rates (with the rate or rates being expressed in terms of a percentage); and

(b)

if there is more than 1 rate, how or when each rate applies; and

(c)

if an annual interest rate is fixed for a period, the period during which the annual interest rate is fixed; and

(d)

if an annual interest rate is variable or adjustable, a statement to that effect.

(2)

The rate or rates made publicly available in the costs of borrowing information—

(a)

must be the rate or rates that are ordinarily available to borrowers who meet the lender’s borrowing requirements for that class of credit contracts; and

(b)

must be the current annual interest rate or rates, if the rate is variable or adjustable; and

(c)

must, if expressed by reference to a range, be accompanied by a brief description of the factors that the lender may consider to determine the specific interest rate for particular classes of borrower.

(3)

If a higher interest rate than the rate or rates made publicly available under subclauses (1) and (2) may apply to a specific borrower (or class of borrowers) or in specific situations, the costs of borrowing information must include—

(a)

a statement to that effect; and

(b)

a brief description of the factors that the lender may consider to determine the specific interest rate for that borrower or those borrowers or situations (if applicable); and

(c)

the margin (or maximum margin) that may be added or the interest rate (or maximum interest rate) that may apply (if known).

(4)

If a higher interest rate may be imposed under the contract in the event of a default in payment or the credit limit being exceeded, this regulation applies as follows:

(a)

references to annual interest rate include the default interest charge rate; and

(b)

the creditor must make the costs of borrowing information for the default interest charge rate publicly available in accordance with this regulation separately from the information on the annual interest rates.

Regulation 4B: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

4C Information about charging interest

(1)

The costs of borrowing information must include a brief description of the frequency with which interest charges may be debited under the contract.

(2)

However, the costs of borrowing information need not include that description if interest charges will always be debited as frequently as, or less frequently than, payments become due under the contract.

Regulation 4C: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

4D Information about credit fees and default fees

The costs of borrowing information must contain a description of the credit fees and default fees that are, or may become, payable, including—

(a)

when each fee is, or will become, payable; and

(b)

the amount (or maximum amount) of each fee if ascertainable, or, if not, the method of calculation of the fee.

Regulation 4D: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

Minimum repayment warning

Heading: inserted, on 6 June 2015, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

4E Minimum repayment warning

(1)

For the purposes of section 19(i) of the Act, the prescribed minimum repayment warning required in the case of a credit card contract is as follows:

If you make only the minimum payment each month*, you will pay more interest and it will take you longer to pay off your balance. Visit www.sorted.org.nz/creditcards to calculate how you can pay off your credit card balance faster and pay less in interest.

*Replace with other payment period, if applicable.

(2)

The format, font, and font size of the minimum repayment warning must be easily readable.

(3)

The minimum repayment warning must be presented reasonably close to the amount stated as the minimum payment for each payment period.

(4)

No minimum repayment warning is required to be included in a continuing disclosure statement in the case of a credit card contract if—

(a)

the closing unpaid balance is below $100; or

(b)

a payment arrangement between the creditor and debtor replaces the minimum payment that would otherwise be required under the contract to be paid in each payment period; or

(c)

an interest-free period applies to the closing unpaid balance.

Compare: National Consumer Credit Protection Regulations 2010 r 79B (Aust)

Regulation 4E: inserted, on 6 June 2015, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

Disclosure

Heading: inserted, on 1 December 2021, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4F Disclosure of agreed changes

(1)

This regulation applies for the purposes of section 22(1)(b) of the Act.

(2)

All of the following is information that must be disclosed, to the extent that it has changed, or will change, as a result of the variation:

Credit limit

(a)

the credit limit:

Annual interest rate

(b)

the annual interest rate or rates under the contract (with the rate or rates being expressed in terms of a percentage):

(c)

if there is more than 1 rate, how each rate applies:

(d)

if an annual interest rate is fixed for the term or any part of the term of the contract, the period during which the annual interest rate is fixed:

(e)

if an annual interest rate is determined by referring to a base rate, particulars that describe how the annual interest rate is determined, including—

(i)

the name of the base rate or a description of it; and

(ii)

the margin or margins (if any) above or below the base rate to be applied to determine the annual interest rate; and

(iii)

where and when the base rate is published or, if it is not published, how the debtor may ascertain the rate; and

(iv)

the current annual interest rate or rates:

Total interest charges

(f)

the total amount of interest charges that are payable in the future under the contract, if ascertainable (but only if the contract would, on the assumptions set out in Schedule 1, be paid out within 7 years of the date on which credit is first provided under the contract):

Credit fees and charges

(g)

if the contract is a high-cost consumer credit contract, a statement of the rate of charge under the contract, as required to be calculated in accordance with section 45H of the Act and these regulations:

Payments required

(h)

if more than 1 payment is to be made,—

(i)

the amount of the future payments or the method of calculating the amount; and

(ii)

if ascertainable, the number of future payments; and

(iii)

if ascertainable, the total amount of future payments (but only if the contract would, on the assumptions set out in Schedule 1, be paid out within 7 years of the date on which credit is first provided under the contract); and

(iv)

when the next payment is due, if ascertainable, and the frequency of future payments.

Regulation 4F: inserted, on 1 December 2021, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4G Disclosure of changes following exercise of power

(1)

This regulation applies for the purposes of section 23(2)(b) of the Act.

(2)

Other information that must be disclosed under section 23 of the Act is, if the contract is a high-cost consumer credit contract, a statement of the rate of charge under the contract, as required to be calculated in accordance with section 45H of the Act and these regulations.

Regulation 4G: inserted, on 1 December 2021, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

4H Disclosure of changes to guarantors

(1)

This regulation applies for the purposes of section 26(2)(b) of the Act.

(2)

Other information that must be disclosed under section 26 of the Act is, if the contract is a high-cost consumer credit contract, a statement of the rate of charge under the contract, as required to be calculated in accordance with section 45H of the Act and these regulations.

Regulation 4H: inserted, on 1 December 2021, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Assessment whether likely that credit or finance will meet borrower’s requirements and objectives

Heading: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AA Lender must collect and assess information

(1)

This regulation applies for the purposes of section 9C(3)(a)(i) and (5A) of the Act.

Lender must collect information

(2)

The lender must make reasonable inquiries to enable the lender to determine all of the following aspects of the borrower’s requirements and objectives before a lender enters into an agreement or makes a material change to an agreement (to the extent that the following aspects are relevant to the material change):

(a)

the amount, or credit limit, of credit or finance that the borrower seeks:

(b)

the purposes for which the credit or finance is to be used or is intended to be used:

(c)

the term of the credit or finance or, if the agreement is a revolving credit contract, whether the borrower requires credit on an ongoing basis:

(d)

if the agreement will include any non-avoidable fees or charges for any additional goods or services that were not part of the borrower’s stated purposes for which the credit or finance is to be used or is intended to be used (see subclause (4)), whether the borrower requires those goods or services and accepts their costs:

(e)

if the agreement will provide for any fees or charges to be financed under the agreement, but those fees or charges could be paid for separately (for example, premiums for insurance related to the credit or payment for extended warranties or repayment waivers to be financed), whether the borrower wants that outcome and accepts the additional costs of the fees or charges being financed:

(f)

if the agreement will require the borrower to make 1 or more lump sum payments (instead of, or in addition to, any regular payments), whether the borrower wants to make lump sum payments in preference to regular payments:

(g)

if the agreement is a credit sale and the property that is the subject of the credit sale is not to be given or sent within 20 working days of the agreement being entered into, when the borrower wants possession of that property:

(h)

if the borrower is entering into an agreement where money received under that agreement will be used to pay all or part of the unpaid balance on an existing agreement (refinancing), the borrower’s objectives in refinancing and, to the extent that the lender is aware of additional costs that will be charged to the borrower as a result of refinancing, whether the borrower accepts those costs in order to achieve those objectives:

(i)

if the agreement is a reverse mortgage,—

(i)

the borrower’s requirements and objectives in relation to meeting future possible needs, including aged care, whether the borrower wants to leave equity in the residential premises or other property to the borrower’s estate, and the extent to which the value of the residential premises or other property enables those requirements and objectives to be met; and

(ii)

the borrower’s preferred form of payment of the advance or advances (for example, lump sum, regular payments, or both).

Lender must assess information

(3)

The lender must then make the assessment required by section 9C(3)(a)(i) of the Act (which is to be satisfied that it is likely that the credit or finance provided under the agreement will meet the borrower’s requirements and objectives), taking into account the results of complying with the obligations in this regulation and other reasonable inquiries required by section 9C(3)(a)(i) of the Act.

Interpretation

(4)

In subclause (2)(d), non-avoidable fee or charge, in respect of any additional goods or services that were not part of the borrower’s stated purposes for which the credit or finance is to be used or is intended to be used, means a fee or charge that applies whether or not the borrower uses those goods or services after the agreement has been entered into (for example, this may include a fee or charge for matters such as airpoints or travel insurance, but does not include a fee or charge that can be avoided by not using the goods or services such as an ATM charge or a charge for foreign exchange transactions).

Regulation 4AA: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AB Additional requirements for certain waivers, warranties, and insurance
Purposes and application

(1)

This regulation applies, in addition to regulation 4AA,—

(a)

for the purposes of section 9C(3)(a)(i) and (5A) of the Act, to the extent that a repayment waiver or an extended warranty is to be financed under an agreement or under a material change to an agreement, in order for a lender to assess whether it is likely that the credit or finance provided under the agreement will meet the borrower’s requirements and objectives; and

(b)

for the purposes of section 9C(5)(a)(i) and (5A) of the Act, in order for a lender to assess whether it is likely that a relevant insurance contract will meet the borrower’s requirements and objectives.

Lender must collect information

(2)

The lender must make reasonable inquiries to enable the lender to determine the following aspects of the borrower’s requirements and objectives:

(a)

whether the borrower requires the waiver, warranty, or insurance, which must include inquiries into all of the following:

(i)

whether the borrower has existing cover, or existing rights under the Consumer Guarantees Act 1993, that may protect against some or all of the risks for which the borrower is seeking cover:

(ii)

whether the borrower’s employment status, residency, or age may make them ineligible to claim some or all of the benefits under the proposed waiver, warranty, or insurance:

(iii)

the benefits and cover that the borrower requires; and

(b)

whether the borrower accepts the costs of the waiver, warranty, or insurance.

Lender must assess information

(3)

After taking into account the results of complying with the obligations in this regulation and other reasonable inquiries required by section 9C(3)(a)(i) and (5)(a)(i) of the Act, the lender must then make the assessment required by those provisions of the Act (which is to be satisfied,—

(a)

to the extent that the amount of credit or finance relates to the repayment waiver or extended warranty, that it is likely that the credit or finance provided under the agreement will meet the borrower’s requirements and objectives; or

(b)

that it is likely that the insurance provided under the relevant insurance contract will meet the borrower’s requirements and objectives.)

Regulation 4AB: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

Assessment of likelihood of substantial hardship

Heading: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AC Purposes

Regulations 4AD to 4AO apply for the purposes of section 9C(3)(a)(ii) and (5A) of the Act.

Regulation 4AC: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AD Outline

(1)

Regulations 4AE to 4AO set out requirements for making reasonable inquiries about whether it is likely that the borrower will make the payments under the agreement without suffering substantial hardship, which in general terms are as follows:

1If the borrower will rely on income to make the payments under the agreement, or if the agreement is a high-cost consumer credit contract,—regulation 4AF applies and full income and expense estimates are required (see regulations 4AJ to 4AN)
2If the lender knows that the borrower will rely on means other than income to make the payments under the agreement,—regulation 4AI applies
3If both 1 and 2 apply,—both regulation 4AF and regulation 4AI apply.

(2)

Exceptions and a presumption also apply (see regulations 4AG, 4AH, and 4AO).

(3)

This regulation is only a guide to the general scheme and effect of regulations 4AE to 4AO.

Regulation 4AD: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AE Interpretation

In this regulation and regulations 4AC to 4AO, unless the context otherwise requires,—

bank account means any account with a registered bank or other financial institution that is of a type that is ordinarily used for the payment of relevant expenses

income means net income from any source after tax, KiwiSaver or other superannuation contributions, and other similar deductions

listed outgoings means any of the following:

(a)

fixed financial commitments, including accommodation costs, insurance, rates, body corporate fees, school fees, and child support that is payable under the Child Support Act 1991:

(b)

payments of any debts (whether existing debts or payments under the agreement being entered into or materially changed):

(c)

living expenses, including utilities, food and groceries, personal expenses (including clothing and personal care), other costs associated with dependants if applicable (such as child care), medical expenses, and transport expenses:

(d)

any regular or frequently recurring outgoings (for example, savings, investments, gym memberships, entertainment costs, or tithing) that are material to the estimate of relevant expenses and that the borrower is unable or unwilling to cease after the agreement is entered into or materially changed

relevant expenses

(a)

means any listed outgoings that are in respect of the relevant period (whether or not they fall due to be paid in or after the relevant period); but

(b)

in the case of a consumer credit contract that is not a high-cost consumer credit contract, may exclude any listed outgoings to the extent that the lender knows that the borrower will rely on means other than income to meet those outgoings

relevant period means the period starting with the date on which the agreement is likely to be entered into or materially changed and ending with the earlier of 1 year after that date or the date on which the agreement is likely to terminate.

Regulation 4AE: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AF General rule: full income and expense estimates required in certain cases

(1)

This regulation applies to—

(a)

a high-cost consumer credit contract; and

(b)

a consumer credit contract unless the lender knows that the borrower will rely wholly on means other than income to make payments under the contract.

(2)

The lender must—

(a)

make reasonable inquiries to enable the lender to estimate over the relevant period—

(i)

the borrower’s likely income on a weekly, fortnightly, or monthly basis (see regulation 4AJ); and

(ii)

the borrower’s likely relevant expenses on a corresponding basis (see regulations 4AK to 4AN); and

(b)

be satisfied on reasonable grounds that it is likely the borrower will make the payments under the agreement without suffering substantial hardship, because the borrower’s likely income exceeds their likely relevant expenses and 1 or both of the following applies:

(i)

there is a reasonable surplus to adequately address the risk that likely income may be overestimated, that likely relevant expenses may be underestimated, or that the borrower may need to incur other expenses that cause them to suffer substantial hardship:

(ii)

the lender’s estimates of likely income and likely relevant expenses include reasonable buffers or adjustments to adequately address the risk that likely income may be overestimated, that likely relevant expenses may be underestimated, or that the borrower may need to incur other expenses that cause them to suffer substantial hardship.

Regulation 4AF: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AG Exception to general rule if obvious no hardship

Regulation 4AF does not apply if—

(a)

the lender makes inquiries that are sufficient to establish that it is obvious in the circumstances of the particular case that the borrower will make the payments under the agreement without suffering substantial hardship, so as to make the inquiries required by regulation 4AF disproportionate; and

(b)

the agreement is not a high-cost consumer credit contract.

Regulation 4AG: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AH Exception to general rules for certain variations and replacements of existing contracts

(1)

Regulations 4AF and 4AI do not apply if—

(a)

the lender is varying (or proposing to vary) an existing consumer credit contract with a borrower or replacing (or proposing to replace) an existing consumer credit contract with a borrower, in whole or in part, with a new consumer credit contract with the same lender; and

(b)

the lender will not make an additional advance to the borrower under the varied or replaced contract that the lender did not take into account when previously satisfying itself as to the matters in section 9C(3)(a) of the Act; and

(c)

either—

(i)

the borrower’s total credit limit will not increase under the varied or replaced contract; or

(ii)

the borrower’s total credit limit under the varied or replaced contract will increase only to the extent reasonably necessary to allow for the postponement or reduction of existing repayments to reduce financial difficulties that the borrower is experiencing or reasonably expects to experience.

(2)

In this regulation, unless the context otherwise requires, total credit limit is calculated as follows:

a + b

where—

a

is the maximum unpaid balances permitted under all revolving credit contracts between the lender and the borrower

b

is the unpaid balance on all other credit contracts between the lender and the borrower immediately before the variation or replacement.

Regulation 4AH: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AI General rule in other cases

(1)

This regulation applies to a consumer credit contract if the lender knows that the borrower will rely, wholly or in part, on means other than income to make payments under the agreement (for example, if the borrower will rely on the proceeds of the sale of an asset to pay a bridging loan).

(2)

The lender must—

(a)

make reasonable inquiries into any other means by which the borrower intends to make payments under the agreement; and

(b)

be satisfied on reasonable grounds that it is likely that those other means will enable the borrower to make those payments under the agreement without suffering substantial hardship.

Regulation 4AI: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AJ Lenders must estimate borrower’s likely income

(1)

This regulation applies for the purposes of regulation 4AF.

(2)

The lender, when estimating the borrower’s likely income under that regulation, must—

(a)

make an estimate of the borrower’s likely income in accordance with subclause (3); and

(b)

ask the borrower about any likely changes to their income.

(3)

An estimate of the borrower’s likely income under subclause (2)(a) must be based on either or both of the following:

(a)

asking the borrower about each source of income and then—

(i)

verifying this based on reliable evidence; or

(ii)

if verification is not reasonably practicable, considering whether the source and amount are realistic; or

(iii)

if the borrower will not rely, wholly or in part, on that income to make the payments under the agreement, disregarding that income; or

(b)

recent and reliable information that the lender holds about the borrower’s income, and confirming with the borrower that the amounts reflect the borrower’s income.

(4)

The lender must estimate the borrower’s likely income after taking into account the results of complying with the obligations in this regulation and other reasonable inquiries required by section 9C(3)(a)(ii) of the Act.

Regulation 4AJ: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AK Lenders must do initial estimate of borrower’s likely relevant expenses

(1)

This regulation sets out the first stage of an estimate of likely relevant expenses under regulation 4AF(2)(a)(ii).

(2)

The lender, when estimating a borrower’s likely relevant expenses under that regulation, must—

(a)

make an initial estimate of the borrower’s likely relevant expenses based on 1 or more of the following:

(i)

asking the borrower about their relevant expenses:

(ii)

obtaining from the borrower recent transaction records, for a period of at least 90 days, from the bank account or accounts from which those expenses have been paid, and confirming with the borrower that the amounts reflect the borrower’s likely relevant expenses:

(iii)

recent and reliable information that the lender holds about the borrower’s relevant expenses, and confirming with the borrower that the amounts reflect the borrower’s likely relevant expenses; and

(b)

ensure that the information used to make the initial estimate is obtained in sufficient detail to minimise the risk of relevant expenses being missed or underestimated to an extent that is material to the estimate; and

(c)

make reasonable inquiries, in accordance with subclause (3), about whether any financial commitments may have been omitted from the initial estimate.

(3)

Reasonable inquiries under subclause (2)(c) must include,—

(a)

in the case of a high-cost consumer credit contract, obtaining a credit report and obtaining from the borrower recent transaction records, for a period of at least 90 days, from the bank account or accounts from which expenses have been paid:

(b)

in the case of any other consumer credit contract, either or both of the following:

(i)

in the case of a borrower who has an existing consumer credit contract with the lender, asking the borrower whether they have taken on any additional financial commitments since the most recent consumer credit contract with that lender was entered into or materially changed:

(ii)

obtaining a credit report, unless the lender has already obtained a credit report within the preceding 60 days or, since obtaining the last credit report, has been continuously subscribed to a service that sends notifications to the lender that are relevant to identifying the borrower’s financial commitments.

(4)

In this regulation, unless the context otherwise requires, obtain a credit report means to obtain from a credit reporter (within the meaning of the Credit Reporting Privacy Code 2020) credit information that is relevant to identifying the borrower’s financial commitments.

Regulation 4AK: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AL How to calculate certain relevant expenses

(1)

This regulation is part of an estimate of likely relevant expenses under regulation 4AF(2)(a)(ii).

Revolving credit contracts

(2)

Relevant expenses in respect of a payment under any revolving credit contract that has a credit limit must be determined as if—

(a)

the borrower will make regular monthly payments calculated as if the credit limit is borrowed (and, for a credit card, as if those borrowings are at the relevant purchase interest rate); and

(b)

in the case of a credit card, the borrower will make payments equal to—

(i)

the minimum required payment or an amount sufficient to repay the credit contract within no more than 3 years, whichever is greater; or

(ii)

if the information required to make either calculation in subparagraph (i) is not readily accessible to the lender, at least 3.8% of the credit limit; and

(c)

in the case of a revolving credit contract that is a home loan, the borrower will repay the credit contract within no more than 30 years; and

(d)

in the case of any other revolving credit contract, the borrower will make payments sufficient to pay, within a reasonable period, the total amount advanced to the borrower under the contract.

Calculation if lump sum payments required

(3)

Subclause (4) applies if any credit contract requires the borrower to make 1 or more lump sum payments (instead of, or in addition to, regular payments).

(4)

Relevant expenses must be determined as if lump sum payments are spread evenly over the period—

(a)

that begins on the following date:

(i)

the date on which the contract under which the lump sum payments are required is or was entered into; or

(ii)

the date on which the borrower is or was most recently required to pay a lump sum payment under that contract; and

(b)

that ends on the date on which the borrower is required to make the lump sum payment.

Examples
Example 1

On 1 November 2021, B enters into a consumer credit contract that requires them to make a lump sum payment of $5,200 on 1 November 2022. The lender under that contract, when estimating the relevant expenses in respect of that contract, must assume that B will contribute $100 each week.

Example 2

On 1 December 2021, D enters into a consumer credit contract that requires them to make a lump sum payment of $4,000 on 1 February 2022. D intends to sell their car to pay the loan, and so intends to rely wholly on means other than income to make the $4,000 payment. The contract is not a high-cost consumer credit contract. The lump sum payment is not a relevant expense (see regulation 4AE) and therefore does not need to be evenly spread.

Example 3

On 1 October 2022, E enters into a consumer credit contract that requires them to make 2 lump sum payments of $5,200 each, the first on 1 October 2023 and the second on 1 October 2024. E applies for further credit on 1 April 2023. The lender under the new April 2023 contract must estimate the relevant expenses in respect of the existing October 2022 contract as follows.

The first lump sum payment due on 1 October 2023 must be spread evenly between 1 October 2022 and 1 October 2023 (ie, the lender must assume that E has relevant expenses of $100 each week between 1 April 2023 and 1 October 2023 in respect of the first lump sum payment).

The second lump sum payment due on 1 October 2024 may be spread evenly—

  • between 1 October 2022 and 1 October 2024 (ie, the lender may assume that E has relevant expenses of $50 each week between 1 April 2023 and 1 October 2024 in respect of the second lump sum payment); or

  • between 1 October 2023 and 1 October 2024 (ie, the lender may assume that E has relevant expenses of $100 each week between 1 October 2023 and 1 October 2024 in respect of the second lump sum payment).

Regulation 4AL: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AM Lenders must adjust initial estimate of borrower’s likely relevant expenses

(1)

This regulation is the second stage of an estimate of likely relevant expenses under regulation 4AF(2)(a)(ii).

(2)

The lender must, to the extent that the initial estimate was based on asking the borrower about relevant expenses under regulation 4AK(2)(a)(i), or if there is a significant risk that the initial estimate materially underestimates relevant expenses, do 1 or more of the following for the affected expenses:

(a)

verify the amount of the expense with reliable evidence, which may include all or any of the following:

(i)

recent transaction records, for a period of at least 90 days, from a bank account from which those expenses have been paid:

(ii)

a copy of a contract or invoice:

(iii)

any other reliable evidence:

(b)

for benchmarkable expenses, use the higher of the initial estimate and the benchmark:

(c)

if neither of the steps in paragraphs (a) and (b) is reasonably practicable, adjust the expense by estimating a reasonable cost for the expense.

(3)

The lender must consider whether the relevant expenses are at a level that would be below a reasonable minimum cost of living for a person in similar circumstances to those of the borrower and, if so, increase the amount of the expense to a reasonable minimum cost.

(4)

See regulation 4AN for benchmarkable expenses.

(5)

The lender must estimate the likely relevant expenses after taking into account the results of complying with the obligations in regulations 4AK and 4AL and this regulation and other reasonable inquiries required by section 9C(3)(a)(ii) of the Act.

Regulation 4AM: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AN Benchmarkable expenses

(1)

An expense is a benchmarkable expense if it, individually or as a group of expenses, is an expense for which the lender may use statistical information about household expenditure, including utilities, food and groceries, and transport expenses (including fuel, warrant of fitness, vehicle registration, vehicle repairs, and vehicle maintenance).

(2)

Statistical information can be used only if it meets the following requirements:

(a)

it must be based on statistical information about individual or household expenses that has been collected and analysed using a robust statistical methodology (for example, based on the Statistics New Zealand Household Economic Survey):

(b)

it must be recent:

(c)

it must be reasonable to use in the circumstances, including that there must be a low risk that the benchmark will be materially lower than the particular borrower’s likely relevant expenses.

Regulation 4AN: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

4AO High-cost consumer credit contracts: presumption of substantial hardship

(1)

This regulation applies in the case of a high-cost consumer credit contract if the lender has reasonable evidence that the borrower has been in default in any payment under 1 or more consumer credit contracts in the preceding 90 days.

(2)

There is a presumption that a borrower will be unlikely to make payments under a high-cost consumer credit contract without suffering substantial hardship.

(3)

However, the lender may rebut the presumption by proving, on the balance of probabilities, that—

(a)

the borrower has remedied the default in payment; or

(b)

the borrower will be able to immediately remedy the default in payment, in addition to meeting their other relevant expenses.

Regulation 4AO: inserted, on 1 December 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020 (LI 2020/296).

Alternative publication requirements

5 Alternative publication requirements

For the purposes of sections 23(4) and 26(4) of the Act, a creditor may make disclosure in relation to a change to the amount of an interest rate, or to the amount of any fee or charge payable, by—

(a)

displaying the information at all of the creditor’s places of business that are accessed by the public so that the information is reasonably visible (at all reasonable times) to persons entering those places of business; and

(b)

advertising the information at least once in the daily newspapers published in all of the following areas in which the creditor carries on business: Whangarei, Auckland, Hamilton, Rotorua, Hawkes Bay, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Dunedin, and Invercargill; and

(c)

if the creditor has a website, posting the information on the creditor’s website in a form that is publicly accessible (at all reasonable times).

Disclosure about dispute resolution and financial mentoring services

Heading: inserted, on 1 December 2021, by section 69(3) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

5A Disclosure about dispute resolution and financial mentoring services: hardship applications, arrears, credit declined, and complaints

(1)

This regulation is for the purposes of section 26B of the Act.

When information needs to be provided

(2)

The other types of complaints to which section 26B(1)(c) of the Act applies are expressions of dissatisfaction that are received by a creditor from a debtor under a consumer credit contract—

(a)

in respect of which the debtor explicitly or implicitly expects a response or a resolution; and

(b)

that relate to the financial service of being a creditor under a credit contract in respect of which the creditor must be a member of an approved dispute resolution scheme under section 48 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

(2A)

The disclosure required by section 26B(1)(c) of the Act must be made no later than 2 working days after a complaint is received or, if it is not practicable to do so, as soon as practicable after that time.

(2B)

However, the information need not be given if the complaint is earlier resolved to the complainant’s satisfaction.

(3)

The information required under section 26B(2)(a) of the Act must be disclosed at the time when a payment reminder is provided by a creditor under a consumer credit contract—

(a)

in respect of a payment that is overdue for more than 10 working days; or

(b)

if the credit limit under the contract has been exceeded for more than 10 working days.

(4)

The information required under section 26B(2)(c) must be disclosed at the time when the creditor advises the person that their application for a high-cost consumer credit contract has been declined.

What information must be provided

(5)

The following information must be disclosed about dispute resolution schemes (unless the Financial Service Providers (Registration and Dispute Resolution) Act 2008 does not require the creditor to be a member of such a scheme):

(a)

the name of the dispute resolution scheme of which the creditor is a member; and

(b)

a statement to the effect that the complainant has access to a free, independent dispute resolution service, and that service may help to investigate or resolve the complaint (if it is not resolved to the complainant’s satisfaction using the creditor’s internal complaints process); and

(c)

the scheme’s contact details to make a complaint.

(6)

The following information must be disclosed about financial mentoring services:

(a)

a statement to the effect that, if the person has concerns about their finances, they can get free and confidential advice from an independent service; and

(b)

the name of a building financial capability service funded by the Ministry of Social Development that provides such a service; and

(c)

the contact details of that service.

(7)

A creditor that is required to disclose information under section 26B of the Act must ensure that any information that they disclose under that section—

(a)

is disclosed in a clear, concise, and intelligible manner; and

(b)

is disclosed free of charge.

Regulation 5A: inserted, on 1 December 2021, by section 69(3) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

Regulation 5A(2): replaced, on 1 December 2021, by regulation 6(1) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 5A(2A): inserted, on 1 December 2021, by regulation 6(1) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 5A(2B): inserted, on 1 December 2021, by regulation 6(1) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 5A(3): replaced, on 1 December 2021, by regulation 6(1) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 5A(5): replaced, on 1 December 2021, by regulation 6(2) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 5A(6): replaced, on 1 December 2021, by regulation 6(2) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Regulation 5A(7): replaced, on 1 December 2021, by regulation 6(2) of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Assumptions

6 Assumptions

For the purposes of section 33 of the Act, the assumptions that may be used or applied when disclosing information that is required to be disclosed under the Act (and the terms and conditions of those assumptions) are set out in Schedule 1.

Regulation 6: amended, on 1 April 2005, by regulation 3 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

High-cost consumer credit contracts

Heading: inserted, on 1 May 2020, by section 69(4) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

6A High-cost consumer credit contracts for which costs of borrowing must not exceed loan advances

For the purposes of the definition of high-cost consumer credit contract, the weighted average annual interest rate must be calculated as follows:

weighted average annual interest rate = Rn = 1 [(rn × Un) ÷ U]

where—

R

is the number of annual interest rates applying on a day

rn

is each annual interest rate

Un

is the unpaid balance to which rn applies

U

is the total unpaid balance.

Example 1

Ms C has a credit card that says that the first $1,000 was charged at an interest rate of 20%, and the rest of the unpaid balance (say, the next $2,000) was charged at an annual interest rate of 30%.

R = 2

r1 = 20%; r2 = 30%

U1 = $1,000; U2 = $2,000

U = $3,000

This gives a weighted average annual interest rate that day of 26.7%. The contract is not a high-cost consumer credit contract.

Example 2

An interest rate of 40% applies to the first $1,000 of the unpaid balance, and another 45% applies to the entire unpaid balance of $3,000.

R = 2

r1 = 40%; r2 = 45%

U1 = $1,000; U2 = $3,000

U = $3,000

This gives a weighted average annual interest rate that day of 58.3%—so it will be a high-cost consumer credit contract, even though each individual annual interest rate is below 50%.

Regulation 6A: inserted, on 1 May 2020, by section 69(4) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

Rate of charge

Heading: inserted, on 1 June 2020, by section 69(4) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

6B Rate of charge

(1)

For the purposes of section 45H of the Act, the rate of charge must be calculated as follows:

Rate of charge

where—

c

is the total amount of charges (as defined in section 45H(5) of the Act) that is payable under the contract

r

is the rate of charge (percent)

T

is the number of days between the first advance under the contract and the final payment made, or anticipated to be made, under the contract

t

is day t

Ut

is the unpaid daily balance on that day excluding the amount of the costs of borrowing within the meaning of section 45E of the Act that have accrued under the contract.

Example

A contract provides for a $500 loan with 200% interest pa and a $20 establishment fee with 4 weekly repayments. The contract provides for total interest and fees of $70.80 to be charged under the contract. The rate of charge calculation requires that amount to be divided by the sum of the daily balances of credit provided. In this case, that sum is $9,131.19. So the rate of charge is 0.775%.

(2)

For purposes of the definition of credit provided in section 45H(5) of the Act, the amount that must be excluded from the unpaid balance is the amount of the costs of borrowing within the meaning of section 45E of the Act that have accrued under the contract.

Regulation 6B: inserted, on 1 June 2020, by section 69(4) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).

Rebate of premium paid under consumer credit insurance contract

7 Rebate of consumer credit insurance contract premium

For the purposes of section 52 of the Act, the proportionate rebate of the premium paid under a consumer credit insurance contract financed under the consumer credit contract must be determined in accordance with the following formula:

formula

where—

y

is the amount of the rebate of the premium

p

is the amount of premium paid

s

is the number of whole months in the unexpired portion of the period for which insurance was agreed to be provided

t

is the number of whole months for which insurance was agreed to be provided.

Example

A consumer credit insurance contract is financed under a consumer credit contract. The period for which insurance was agreed to be provided under the consumer credit insurance contract is 36 months and a premium of $500 is paid. Full prepayment of the consumer credit contract is made 18 months and 24 days after the commencement of the period for which insurance was agreed to be provided. Applying the above formula, the amount of the rebate of the consumer credit insurance contract premium is calculated as follows:

p = $500

s = 17 (36 months − 18 months and 24 days = 17 months and 6 days, which is 17 whole months)

t = 36

formula

The amount of the rebate of the premium is $114.86.

Rebate of repayment waiver

Heading: inserted, on 6 June 2015, by regulation 6 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

7A Rebate of repayment waiver

For the purposes of section 52A of the Act, the rebate for the repayment waiver must be calculated in accordance with the following formula:

y = (p × s × (s + 1)) ÷ (t × ( t + 1))

where—

y

is the amount of the rebate of the consideration paid for the repayment waiver

p

is the amount of the consideration paid for the repayment waiver

s

is the number of whole months in the unexpired portion of the period for which the repayment waiver applied

t

is the number of whole months for which the repayment waiver applied.

Regulation 7A: inserted, on 6 June 2015, by regulation 6 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

Rebate of extended warranty

Heading: inserted, on 6 June 2015, by regulation 6 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

7B Rebate of extended warranty

For the purposes of section 52B of the Act, the rebate for the extended warranty must be calculated in accordance with the following formula:

y = p × s ÷ t

where—

y

is the amount of the rebate of the consideration paid for the extended warranty

p

is the amount of the consideration paid for the extended warranty

s

is the number of whole months in the unexpired portion of the period for which the extended warranty applied

t

is the number of whole months for which the extended warranty applied.

Regulation 7B: inserted, on 6 June 2015, by regulation 6 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

Creditor’s loss arising from full prepayment

8 Application of regulation 9

Regulation 9 applies to a fixed rate contract if—

(a)

the contract has one fixed interest rate that is fixed for the whole term (whether or not the contract provides for default interest charges); and

(b)

the contract requires payments of equal amounts to be made at equal intervals; and

(c)

all the variables contained in the formula set out in regulation 9 can be determined with reasonable accuracy.

9 Calculation of reasonable estimate of creditor’s loss if interest rate fixed for whole term

(1)

For the purposes of section 54(1)(a) of the Act, a reasonable estimate of a creditor’s loss arising from a full prepayment of a fixed rate contract may be determined in accordance with the following formula:

LRE = VFPu

where—

LRE

is the reasonable estimate of the creditor’s loss arising from the full prepayment

VFP

is the value of forgone payments calculated in accordance with subclause (2)

u

is the unpaid balance at the time of the full prepayment.

(2)

The value of forgone payments is calculated in accordance with the following formula:

formula

where—

VFP

is the value of forgone payments

p

is the amount of each payment payable under the fixed rate contract

v

is calculated in accordance with subclause (3)

n

is the number of payments yet to be made under the fixed rate contract

f

is the number of payments to be made per year under the fixed rate contract

i

is the annual fixed interest rate determined in accordance with subclauses (4) and (5) and expressed as a decimal fraction

d

is the number of days between the payment due date that immediately precedes the date of full prepayment and the date of full prepayment.

(3)

The variable v is calculated in accordance with the following formula:

formula

where—

i

is the annual fixed interest rate determined in accordance with subclauses (4) and (5) and expressed as a decimal fraction

f

is the number of payments to be made per year under the fixed rate contract.

(4)

The annual fixed interest rate i is the annual fixed interest rate that at the date of full prepayment of the fixed rate contract the creditor usually offers on a fixed rate contract that—

(a)

is of the same or a similar type as the fixed rate contract that is to be fully prepaid; and

(b)

has a term that is—

(i)

equal to the unexpired portion of the term of the fixed rate contract that is to be fully prepaid; or

(ii)

closest to the unexpired portion of the term of the fixed rate contract that is to be fully prepaid, whether shorter or longer (if the creditor does not offer a fixed rate contract with a term equal to the unexpired portion of the term of the fixed rate contract that is to be fully prepaid).

(5)

If more than 1 annual fixed interest rate applies under subclause (4)(b)(ii), the annual fixed interest rate i is the higher or highest of those annual fixed interest rates.

(6)

If a reasonable estimate of a creditor’s loss arising from a full prepayment determined in accordance with the formula in subclause (1) is less than zero, then the reasonable estimate of that creditor’s loss arising from the full prepayment is zero.

Example

A debtor is advanced $5,000 under a fixed rate contract. The contract is for a term of 2 years. The annual interest rate for the whole term is 12%. Each of the 24 monthly payments is $235.37. Full prepayment of the contract is made after 6 months and 5 days (5 days since the last payment due date) when the unpaid balance is $3,865.66. At the date of full prepayment, the annual interest rate that the creditor usually charges on a fixed rate contract of the same or a similar type as the fixed rate contract that is to be fully prepaid with a term of 12 months is 10% (a 12-month fixed rate contract having an interest rate of 10% being closest in term to the 18-month unexpired portion of the term of the fixed rate contract that is to be fully prepaid). Applying the above formula, a reasonable estimate of the creditor’s loss arising from the full prepayment is calculated as follows:

p = $235.37

n = 18

f = 12

i = 0.1

d = 5

u = $3,865.66

formula

LRE = $3,924.23 − $3,865.66 = $58.57

A reasonable estimate of the creditor’s loss is $58.57.

If, however, in the above example the interest rate for fixed term contracts offered by the creditor for a term of 12 months was 15%, then variables v and VFP would be:

formula

LRE would then be calculated as follows:

LRE = $3,780.11 − $3,865.66 = − $85.55.

A reasonable estimate of the creditor’s loss in this case would be zero.

Note: For the purpose of this example only, calculations have been rounded to 9 decimal places.

10 Application of regulation 11

Regulation 11 applies to a fixed rate contract if—

(a)

the contract has a fixed interest period for part, but not the whole, of the term (whether or not the contract provides for default interest charges); and

(b)

the contract is fully prepaid during that fixed interest period; and

(c)

the contract requires payments of equal amounts to be made at equal intervals during that fixed interest period; and

(d)

all the variables contained in the formula set out in regulation 11 can be determined with reasonable accuracy.

11 Calculation of reasonable estimate of creditor’s loss if interest rate fixed for part of term

(1)

For the purposes of section 54(1)(a) of the Act, a reasonable estimate of a creditor’s loss arising from a full prepayment of a fixed rate contract may be determined in accordance with the following formula:

LRE = VFPu

where—

LRE

is the reasonable estimate of the creditor’s loss arising from the full prepayment

VFP

is the value of forgone payments calculated in accordance with subclause (2)

u

is the unpaid balance at the time of the full prepayment.

(2)

The value of forgone payments is calculated in accordance with the following formula:

formula

where—

VFP

is the value of forgone payments

p

is the amount of each payment payable under the fixed rate contract during the fixed interest period in which the contract is fully prepaid

v

is calculated in accordance with subclause (3)

n

is the number of payments yet to be made under the fixed rate contract during the fixed interest period in which the contract is fully prepaid

f

is the number of payments to be made per year under the fixed rate contract during the fixed interest period in which the contract is fully prepaid

i

is the annual fixed interest rate determined in accordance with subclauses (4) and (5) and expressed as a decimal fraction

d

is the number of days between the payment due date that immediately precedes the date of full prepayment and the date of full prepayment

EB

is the expected unpaid balance at the end of the fixed interest period in which the fixed rate contract is fully prepaid calculated in accordance with subclause (6).

(3)

The variable v is calculated in accordance with the following formula:

formula

where—

i

is the annual fixed interest rate determined in accordance with subclauses (4) and (5) and expressed as a decimal fraction

f

is the number of payments to be made per year under the fixed rate contract during the fixed interest period in which the contract is fully prepaid.

(4)

The annual fixed interest rate i is the annual fixed interest rate that at the date of full prepayment of the fixed rate contract the creditor usually offers on a fixed rate contract that—

(a)

is of the same or a similar type as the fixed rate contract that is to be fully prepaid; and

(b)

has a fixed interest period that is—

(i)

equal to the unexpired portion of the fixed interest period of the fixed rate contract that is to be fully prepaid; or

(ii)

closest to the unexpired portion of the fixed interest period of the fixed rate contract that is to be fully prepaid, whether shorter or longer (if the creditor does not offer a contract with a fixed interest period equal to the unexpired portion of the fixed interest period of the fixed rate contract that is to be fully prepaid).

(5)

If more than 1 annual fixed interest rate applies under subclause (4)(b)(ii), the annual fixed interest rate i is the higher or highest of those annual fixed interest rates.

(6)

The expected unpaid balance at the end of the fixed interest period is calculated in accordance with the following formula:

EB = u + ICTP

where—

EB

is the expected unpaid balance at the end of the fixed interest period in which the fixed rate contract is fully prepaid

u

is the unpaid balance at the time of the full prepayment

IC

is the total amount of the interest charges that would have been paid in accordance with the contract during the unexpired portion of the fixed interest period in which the fixed rate contract is fully prepaid

TP

is the total of all payments that would have been paid in accordance with the contract during the unexpired portion of the fixed interest period in which the fixed rate contract is fully prepaid.

(7)

If a reasonable estimate of a creditor’s loss arising from a full prepayment determined in accordance with the formula in subclause (1) is less than zero, then the reasonable estimate of that creditor’s loss arising from the full prepayment is zero.

Example

A debtor is advanced $5,000 under a fixed rate contract. The contract is for a term of 2 years. For the first year the interest rate is fixed at 12% and the 12 monthly payments are $235.37. For the remainder of the term a floating interest rate applies. Full prepayment of the contract is made after 6 months and 5 days (5 days since the last payment due date) when the unpaid balance is $3,865.66. At the date of full prepayment, the annual fixed interest rate that the creditor usually charges on a fixed rate contract of the same or a similar type as the fixed rate contract that is to be fully prepaid with a term of 6 months (6 months being the nearest term to the unexpired portion of the fixed interest period of the fixed rate contract that is to be fully prepaid) is 10%. During the unexpired portion of the fixed interest period of the fixed rate contract that is to be fully prepaid, total payments of $1,412.22 would have been payable ($235.37 x 6 months), including total interest charges of $195.67. Applying the above formula, a reasonable estimate of the creditor’s loss arising from the full prepayment is calculated as follows:

formula

A reasonable estimate of the creditor’s loss is $31.79.

Note: For the purpose of this example only, calculations have been rounded to 9 decimal places.

Regulation 11: substituted, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

Model disclosure statements

Heading: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

12 Model disclosure statements

For the purposes of section 34 of the Act—

(a)

the model disclosure statement that may be used for the disclosure of information under section 17(1) of the Act for a consumer credit contract other than a revolving credit contract is set out in form 1 of Schedule 2:

(b)

the model disclosure statement that may be used for the disclosure of information under section 17(1) of the Act for a revolving credit contract is set out in form 2 of Schedule 2:

(c)

the model disclosure statements in Schedule 2 must be used in accordance with regulations 13 to 16.

Regulation 12: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

13 Terms and conditions for use of model disclosure statements

(1)

A model disclosure statement may be—

(a)

printed in any font and font size that is easily readable by a reasonable person:

(b)

printed in any colour or colours:

(c)

formatted with or without the use of borders or boxes around the text:

(d)

extended to provide sufficient space or lines in each box to enable completion of the required information in accordance with subclause (2).

(2)

A model disclosure statement must be completed by—

(a)

inserting in legible type or writing all of the information required by section 17(1) of the Act to be disclosed that is applicable to a particular consumer credit contract:

(b)

omitting any information (including any alternative information requirement) that is not applicable to the particular consumer credit contract, either by deleting that information from the model disclosure statement or by clearly striking through the space on the model disclosure statement for the disclosure of that information:

(c)

omitting the square brackets and the words in those square brackets that provide guidance for completion of the forms.

(3)

A model disclosure statement may not be completed by inserting the words “not applicable” to indicate that a requirement to disclose information is not applicable to a particular consumer credit contract.

Regulation 13: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

14 Format and layout may not be modified

Except as provided in these regulations, the format and layout of a model disclosure statement may not be modified.

Regulation 14: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

15 Other information

(1)

The following information may be included in a model disclosure statement in addition to the information that must otherwise be disclosed in accordance with the Act and these regulations:

(a)

the name and address of the debtor:

(b)

any name, logo, mark, design, or other information relating to the creditor if that information is included in a manner that is not likely to deceive or mislead a reasonable person or detract from the information that is required to be disclosed by the Act.

(2)

Except as provided in subclause (1), no other information may be included in a model disclosure statement.

Regulation 15: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

16 Model disclosure statement may be divided into 2 parts

If a model disclosure statement is included as part of 1 or more documents, the model disclosure statement may be divided into no more than 2 parts with 1 part comprising only the statement relating to the debtor’s right to cancel under section 27 of the Act.

Regulation 16: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

Other key information concerning consumer credit contract

Heading: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

17 Other key information

(1)

For the purposes of paragraph (v) of Schedule 1 of the Act the information set out in subclause (2) is information that is key information concerning a consumer credit contract.

(2)

The information referred to in subclause (1) is a description of the credit fees that are, or may become, payable by the debtor to, or for the benefit of, the creditor in connection with the credit contract (unless the credit fee is disclosed under paragraph (c) or paragraph (n) of Schedule 1 of the Act), including—

(a)

when each of those credit fees is payable, if ascertainable; and

(b)

the amount of each of those credit fees if ascertainable, but, if not, the method of calculation of the fee.

Regulation 17: added, on 1 April 2005, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

Exemptions

Heading: inserted, on 6 June 2015, by regulation 7 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

18 Exemptions from provisions relating to consumer credit contracts where local authority to provide credit

(1)

A credit contract is exempt from the application of the provisions of the Act that are listed in subclause (2) if—

(a)

the contract provides for a local authority to provide credit in connection with the funding of an activity on a rating unit; and

(b)

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.

(2)

The provisions of the Act referred to in subclause (1) are as follows:

(a)

section 18 (continuing disclosure):

(b)

section 38 (early debit or payment of interest charges prohibited):

(c)

section 41 (unreasonable credit fee or default fee) as it applies in relation to default fees:

(d)

section 51 (amount required for full prepayment):

(e)

subpart 8 of Part 2 (changes on grounds of unforeseen hardship).

(3)

The exemptions given by subclause (1) do not apply if—

(a)

a person other than a local authority is a creditor under the contract; or

(b)

credit is provided under the contract otherwise than in connection with the funding of the activity on the rating unit; or

(c)

the contract is a revolving credit contract.

(4)

The exemption given by subclause (1) from the application of section 18 of the Act is subject to the condition that the creditor complies with section 18(1) of the Act as if the maximum period for a continuing disclosure statement were 12 months.

(5)

The exemption given by subclause (1) from the application of subpart 8 of Part 2 of the Act applies only if—

(a)

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; and

(b)

the objectives stated in the adopted policy in accordance with section 109(1)(a) or 110(1)(a) of the Local Government Act 2002 include—

(i)

an objective of assisting ratepayers whose ability to pay their rates is impaired because they are in financial difficulty; or

(ii)

an objective that is substantially the same as the objective referred to in subparagraph (i).

(6)

In this regulation,—

local authority has the meaning given by section 5 of the Local Government (Rating) Act 2002

rate has the meaning given by section 5 of the Local Government (Rating) Act 2002

ratepayers is to be read in accordance with section 10 of the Local Government (Rating) Act 2002

rating unit means a rating unit for the purposes of the Rating Valuations Act 1998

targeted rate means a rate set under section 16 of the Local Government (Rating) Act 2002.

(7)

This regulation applies only to credit contracts entered into on or after 6 June 2015.

Regulation 18: inserted, on 6 June 2015, by regulation 7 of the Credit Contracts and Consumer Finance Amendment Regulations 2015 (LI 2015/57).

18A Exemption from enforcement prohibition
[Revoked]

Regulation 18A: revoked, on 13 January 2020, by section 35 of the Regulatory Systems (Economic Development) Amendment Act 2019 (2019 No 62).

18B Exemptions from provisions relating to repossession of consumer goods in cases involving motor vehicles

(1)

This regulation applies to a credit contract if, in connection with the contract, there is a security interest in consumer goods that are or include a motor vehicle.

(2)

The credit contract is exempt from the application of section 83O(1)(c) of the Act in relation to the exercise of a right of entry of premises by a creditor or creditor’s agent for the purpose of repossessing the motor vehicle (and no other consumer goods), but only if the creditor or creditor’s agent holds a vehicle recovery authorisation.

(3)

The credit contract is exempt from the application of section 83P(2)(c) of the Act in relation to the entry onto any premises by a creditor or creditor’s agent for the purpose of repossessing the motor vehicle (and no other consumer goods), but—

(a)

only in relation to the document referred to in section 83O(1)(c) of the Act; and

(b)

only if the creditor or creditor’s agent holds a vehicle recovery authorisation and leaves a copy of that authorisation with the notice referred to in section 83P(2) of the Act.

(4)

The credit contract is exempt from the application of section 83T(2) of the Act in relation to a creditor authorising, allowing, or permitting a repossession agent or repossession employee to repossess (including by entering residential premises) the motor vehicle (and no other consumer goods), but only if the repossession agent or repossession employee holds a vehicle recovery authorisation.

(5)

The credit contract is exempt from the application of section 83T(3)(b) of the Act (including the application of the reference to section 83T(3)(b) in section 83T(4)) in relation to a repossession agent or repossession employee exercising any rights (including entering residential premises) in relation to repossessing the motor vehicle (and no other consumer goods), but only if the repossession agent or repossession employee holds a vehicle recovery authorisation.

(6)

The credit contract is exempt from the application of section 83T(4) of the Act in relation to a creditor personally entering residential premises for the purpose of repossessing the motor vehicle (and no other consumer goods), but only if the creditor holds a vehicle recovery authorisation.

(7)

In this regulation,—

motor vehicle

(a)

means a motor vehicle as defined in section 2(1) of the Land Transport Act 1998; but

(b)

does not include a moped, or a motorcycle, as defined in section 2(1) of that Act

vehicle recovery authorisation means—

(a)

a vehicle recovery service licence as defined in section 2(1) of the Land Transport Act 1998; or

(b)

a vehicle recovery endorsement under rule 33 of the Land Transport (Driver Licensing) Rule 1999.

(8)

Subclauses (2) to (6) are to be read in accordance with section 83B of the Act.

Regulation 18B: inserted, on 19 February 2016, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2016 (LI 2016/21).

Regulation 18B(3)(b): amended, on 19 August 2016, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2016 (LI 2016/21).

18C Exemptions from disclosure requirements for peer-to-peer lenders

(1)

Subclause (2) applies to a consumer credit contract if—

(a)

the contract is to be entered into by means of a licensed peer-to-peer lending service; and

(b)

a representative creditor under the contract complies with the creditor identification requirement in respect of that creditor (or more than 1 representative creditor does).

(2)

The contract is exempt from any other application of section 17 of the Act in relation to the creditor identification requirement (and, accordingly, no other creditor need comply with the requirement).

(3)

Subclause (4) applies to a consumer credit contract if—

(a)

the contract is, or is to be, entered into by means of a licensed peer-to-peer lending service; and

(b)

creditors under the contract take, or are to take, a guarantee of the contract; and

(c)

a representative creditor taking the guarantee complies with the creditor identification requirement in respect of that creditor (or more than 1 such representative creditor does).

(4)

The contract is exempt from any other application of section 25 of the Act in relation to the creditor identification requirement for the guarantee (and, accordingly, no creditor other than the representative creditor mentioned in subclause (3)(c) need comply with the requirement).

(5)

Subclause (6) applies to a consumer credit contract if—

(a)

the contract is entered into by means of a licensed peer-to-peer lending service; and

(b)

a creditor transfers rights under the contract to another creditor; and

(c)

neither of those creditors is a representative creditor.

(6)

The contract is exempt from the application of section 26A of the Act in respect of the transfer.

(7)

In this regulation,—

creditor identification requirement means the requirement under section 17 or 25 of the Act for a creditor to ensure the disclosure of information set out in paragraphs (a), (aa), (ua), (ub), and (uc) of Schedule 1 of the Act (creditor’s name, address, dispute resolution scheme details, and registration details)

licensed means licensed under section 390 of the Financial Markets Conduct Act 2013

peer-to-peer lending service has the same meaning as in regulation 185 of the Financial Markets Conduct Regulations 2014

representative creditor, in relation to a consumer credit contract entered into by means of a licensed peer-to-peer lending service, means a creditor under the contract—

(a)

who provides the service; or

(b)

who—

(i)

is introduced (directly or indirectly) by a provider of the service to each other creditor under the contract; and

(ii)

holds property or exercises rights under the contract for the benefit, or on behalf, of each other creditor.

Regulation 18C: inserted, on 15 March 2019, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations 2019 (LI 2019/53).

18D Exemptions for banks for COVID-19 from provisions relating to consumer credit contracts

(1)

A consumer credit contract is exempt from the application of the provisions of the Act that are listed in subclause (2) if—

(a)

a registered bank is the creditor or manages the contract in circumstances that relate to securitisation or covered bond arrangements or similar arrangements; and

(b)

the borrower is experiencing, or reasonably expects to experience, financial difficulties due to the economic or health effects of COVID-19; and

(c)

the contract is either—

(i)

an existing contract that is varied (or proposed to be varied) for the purpose of reducing those difficulties; or

(ii)

a replacement contract that is entered into (or proposed to be entered into) for the purpose of reducing those difficulties.

(2)

The provisions of the Act referred to in subclause (1) are as follows:

(a)

if an existing contract is being varied, section 9C(2)(a)(iii), but only to the extent that that provision may require the creditor to be satisfied that it is likely that the borrower will continue to make the payments under the agreement without suffering substantial hardship:

(b)

if the contract is a replacement contract, section 9C(3)(a)(ii) (lenders must make reasonable inquiries, before entering into the agreement with a borrower, so as to be satisfied that it is likely that the borrower will make the payments under the agreement without suffering substantial hardship):

(c)

sections 17, 22(2) and (4), and 26(3) to the extent of the time limits for making disclosure and giving or sending terms:

(d)

section 57A(1) (which relates to the obligations of creditors in relation to hardship applications).

(3)

The exemption from sections 17, 22(2) and (4), and 26(3) is subject to the condition that the registered bank must, as soon as is reasonably practicable, make the disclosure, and give or send the terms, required under the relevant section.

(4)

The exemption from section 57A(1) is subject to the condition that the registered bank must, as soon as is reasonably practicable after receiving an application for a change to the contract on grounds of unforeseen hardship,—

(a)

decide whether to agree to change the contract in accordance with the application; and

(b)

give the borrower the notice and summary required by section 57A(1)(c)(ii) and (iii) (that is, written notice of the decision and, if the creditor does not agree to change the contract in accordance with the application, written notice setting out the registered bank’s reasons for that decision and a clear summary of the borrower’s rights under section 58 of the Act).

(5)

In this regulation,—

borrower includes any debtor as that term is defined in the Act

registered bank has the same meaning as in section 2(1) of the Reserve Bank of New Zealand Act 1989

replacement contract means a contract (where a registered bank is the creditor or manages the contract in circumstances that relate to securitisation or covered bond arrangements or similar arrangements) with a borrower that replaces (in whole or in part) an existing contract—

(a)

with the same registered bank; or

(b)

that is managed by the same registered bank in any of those circumstances.

(6)

This regulation applies only to consumer credit contracts entered into or varied on or before the close of 31 October 2020.

Regulation 18D: inserted, on 1 April 2020, by regulation 4 of the Credit Contracts and Consumer Finance (Exemptions for COVID-19) Amendment Regulations 2020 (LI 2020/55).

Regulation 18D heading: amended, on 13 May 2020, by regulation 4 of the Credit Contracts and Consumer Finance (Exemptions for COVID-19) Amendment Regulations (No 2) 2020 (LI 2020/83).

18E Exemptions for non-bank lenders for COVID-19 from provisions relating to consumer credit contracts

(1)

A consumer credit contract is exempt from the application of the provisions of the Act that are listed in subclause (2) if—

(a)

a non-bank lender is the creditor or manages the contract in circumstances that relate to securitisation or covered bond arrangements or similar arrangements; and

(b)

the non-bank lender is not a mobile trader; and

(c)

the debtor is experiencing, or reasonably expects to experience, financial difficulties due to the economic or health effects of COVID-19; and

(d)

the contract is either—

(i)

an existing contract that is varied (or proposed to be varied) for the purpose of reducing those difficulties; or

(ii)

a replacement contract that is entered into (or proposed to be entered into) for the purpose of reducing those difficulties; and

(e)

the contract is not a high-cost consumer credit contract.

(2)

The provisions of the Act referred to in subclause (1) are sections 17, 22(2) and (4), and 26(3) to the extent of the time limits for making disclosure and giving or sending terms.

(3)

The exemptions are subject to the condition that the non-bank lender must, as soon as is reasonably practicable, make the disclosure, and give or send the terms, required under the relevant section.

(4)

In this regulation,—

non-bank lender means a person who is not a registered bank as defined in section 2(1) of the Reserve Bank of New Zealand Act 1989

replacement contract means a contract (where a non-bank lender is the creditor or manages the contract in circumstances that relate to securitisation or covered bond arrangements or similar arrangements) with a debtor that replaces (in whole or in part) an existing contract—

(a)

with the same non-bank lender; or

(b)

that is managed by the same non-bank lender in any of those circumstances.

(5)

This regulation applies only to consumer credit contracts entered into or varied on or before the close of 31 October 2020.

Regulation 18E: inserted, on 13 May 2020, by regulation 5 of the Credit Contracts and Consumer Finance (Exemptions for COVID-19) Amendment Regulations (No 2) 2020 (LI 2020/83).

18F Exemption for credit under residential earthquake-prone building financial assistance scheme

(1)

A credit contract is exempt from being a consumer credit contract if the credit is provided by Kāinga Ora (as creditor) under the REPB scheme.

(2)

However, the contract is exempt only if Kāinga Ora complies with the following conditions:

(a)

the terms of the credit contract must be expressed in plain language in a clear, concise, and intelligible manner:

(b)

Kāinga Ora must ensure that, before the contract is entered into,—

(i)

disclosure of the initial disclosure information (set out in subclause (3)) is made to every debtor; and

(ii)

a copy of all of the terms of the contract not disclosed under subparagraph (i) (other than terms implied by law) is given or sent to every debtor:

(c)

Kāinga Ora must ensure that disclosure of the continuing disclosure information (set out in subclause (4)) is made in a continuous disclosure statement given to the debtor at least once every 6 months (unless subclause (6) applies):

(d)

the disclosures required by paragraphs (b) and (c) must be made in accordance with sections 32 to 35 of the Act (except section 32(1)(b)) (which apply as if the contract were a consumer credit contract).

(3)

The initial disclosure information is as much of the following as is applicable to the contract:

Full name and address of creditor

(a)

the full name and full address of the creditor:

(b)

the trading name of the creditor (if different from its full name specified under paragraph (a)):

Total advances

(c)

the total of all advances made or to be made in connection with the contract, if ascertainable:

Annual interest rate

(d)

the annual interest rate or rates under the contract (with the rate or rates being expressed in terms of a percentage):

(e)

if there is more than 1 rate, how each rate applies:

(f)

if an annual interest rate is fixed for the term or any part of the term of the contract, the period during which the annual interest rate is fixed:

(g)

if an annual interest rate is determined by referring to a base rate, particulars that describe how the annual interest rate is determined, including—

(i)

the name of the base rate or a description of it; and

(ii)

the margin or margins (if any) above or below the base rate to be applied to determine the annual interest rate; and

(iii)

where and when the base rate is published or, if it is not published, how the debtor may ascertain the rate; and

(iv)

the current annual interest rate or rates:

Method of charging interest

(h)

the method of calculating interest charges payable under the contract and the frequency with which interest charges are debited under the contract:

Interest free period

(i)

if the contract involves an interest free period, the following particulars:

(i)

the length of the interest free period:

(ii)

when interest will begin to accrue:

Credit fees and charges

(j)

a description of the credit fees and charges (other than interest charges) that are, or may become, payable under the contract, including—

(i)

when each fee or charge is payable, if ascertainable; and

(ii)

the amount of each fee or charge if ascertainable, but, if not, the method of calculation of the fee or charge:

Full prepayment

(k)

how the reasonable estimate of the creditor’s loss on full prepayment is calculated and whether a statutory procedure prescribed in regulations is used:

Security interest

(l)

a description of any security interest that is or may be taken in connection with the contract, including a clear explanation of—

(i)

the nature of the security interest; and

(ii)

the property that is, or is proposed to be, subject to the security interest; and

(iii)

the extent to which the debtor’s obligations to the creditor are secured by the security interest, including whether, if the creditor’s rights under the security were to be exercised, the debtor would, or may, remain indebted to the creditor (if there is a shortfall in the proceeds of the sale of the property that is subject to the security interest); and

(iv)

what the consequences would be if the debtor were to give a security interest over the property referred to in subparagraph (ii) to a person other than the creditor and, as a result, the debtor were to be in breach of the contract, including whether the property that would be subject to the security interest would be liable to repossession:

Default interest charges and default fees

(m)

particulars that describe any default interest charges and default fees that may be payable under the contract including how and when default interest charges and default fees would become payable:

Continuing disclosure statements

(n)

the frequency with which continuing disclosure statements will be provided (unless subclause (6) applies):

Consent to electronic communications

(o)

if the creditor consents to receive notices or other communications from the debtor in electronic form, whether by means of an electronic communication or otherwise, a statement to that effect.

(4)

The continuing disclosure information is as much of the following as is applicable to the contract:

(a)

the opening and closing dates of the period covered by the statement:

(b)

the opening and closing unpaid balances:

(c)

the date, amount, and a description of each advance during the statement period:

(d)

the date and amount of each interest charge debited to the debtor’s account during the statement period:

(e)

the date and amount of each amount paid by the debtor to the creditor, or credited to the debtor, during the statement period:

(f)

the date, amount, and a description of each fee or charge debited to the debtor’s account during the statement period:

(g)

the annual interest rate or rates during the statement period (expressed as a percentage or percentages).

(5)

The opening unpaid balance (referred to in subclause (4)(b)) for a statement period must not exceed the closing unpaid balance shown in the previous statement.

(6)

Disclosure to a debtor under subclause (2)(c)—

(a)

is not required if—

(i)

Kāinga Ora maintains (at all reasonable times) a website that allows the debtor to access the continuing disclosure information for any reasonable statement period specified by the debtor; and

(ii)

the debtor consents to the information being disclosed in that way; and

(b)

is not required in relation to a particular period if,—

(i)

Kāinga Ora cannot reasonably locate the debtor; or

(ii)

during that period,—

(A)

there have been no debits or credits to the debtor’s account and the unpaid balance is nil; or

(B)

Kāinga Ora has written off the unpaid balance and there are no subsequent credits or debits to the debtor’s account; or

(C)

the debtor has breached the contract and Kāinga Ora has commenced enforcement proceedings; or

(D)

the debtor has been declared bankrupt or died and the Official Assignee or executors or trustees or administrator of the debtor’s estate have not requested a continuing disclosure statement.

(7)

If, in accordance with subclause (6), disclosure has not been made in relation to a particular period, the next disclosure that is made under subclause (2)(c) must cover every immediately preceding period for which disclosure was not made.

(8)

In this regulation,—

Kāinga Ora means Kāinga Ora–Homes and Communities established by section 8 of the Kāinga Ora–Homes and Communities Act 2019 (or, if that body is replaced as the creditor under the REPB scheme, the replacement creditor)

REPB scheme means the residential earthquake-prone building financial assistance scheme established by the Government (as announced in the 2019/20 Budget and as varied from time to time) to provide financial assistance to certain persons—

(a)

who own and occupy earthquake-prone household units in areas of high seismic risk (as defined in section 133AD of the Building Act 2004); and

(b)

who are required under subpart 6A of Part 2 of that Act to carry out seismic work; and

(c)

for whom doing so would cause significant financial hardship.

Regulation 18F: inserted, on 3 September 2020, by regulation 4 of the Credit Contracts and Consumer Finance (Residential Earthquake-prone Building Financial Assistance Scheme) Amendment Regulations 2020 (LI 2020/183).

Regulation 18F(2)(d): amended, on 3 September 2020, by regulation 7 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

18G Exemption from disclosure about financial mentoring services

A consumer credit contract is exempt from the application of section 26B(2)(a) of the Act if the debtor rectifies the default in payment, or the exceeding of the credit limit under the contract, within 10 working days.

Regulation 18G: inserted, on 1 December 2021, by regulation 8 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

18H Exemptions for insurance premium funding agreements

(1)

A consumer credit contract is exempt from the application of section 9C(3)(a) of the Act to the extent that—

(a)

the contract is a premium funding agreement; and

(b)

the consumer is not required to pay default interest charges, default fees, or credit fees (except for establishment fees) in respect of the contract.

(2)

For the purposes of this regulation,—

insurance contract means a contract of insurance within the meaning of the Insurance (Prudential Supervision) Act 2010

premium funding agreement means an agreement under which—

(a)

a creditor agrees to make an advance to the consumer that must be applied only to either or both of the following purposes:

(i)

to pay an amount payable for premiums under an insurance contract:

(ii)

to pay other amounts in connection with an insurance contract (including fees for advice or services provided in connection with the insurance contract and taxes payable in connection with the insurance contract); and

(b)

if the consumer is required to provide a security interest, the property that is subject to the security interest is limited to the consumer’s rights and interests in the insurance contract; and

(c)

the consumer has the right to cancel at any time, while incurring no further liability for payment.

Regulation 18H: inserted, on 1 October 2021, by regulation 6 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Other circumstances in which section 26A of Act (disclosure of transfer of rights of creditor) not to apply

Heading: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations (No 2) 2015 (LI 2015/82).

Heading: amended, on 15 March 2019, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2019 (LI 2019/53).

19 Section 26A of Act not to apply if transfer made for purposes of securitisation or covered bond arrangements or similar arrangements

(1)

For the purposes of section 26A(3) of the Act, section 26A of the Act does not apply in the case of a transfer of the kind referred to in section 26A(1) of the Act if—

(a)

the transfer is made for the purposes of securitisation or covered bond arrangements or similar arrangements; and

(b)

regulation 20 or 21 applies.

(2)

In this regulation and regulations 20 and 21,—

debtor means a debtor under the relevant contract

disclosure deadline means the end of the period of 10 working days referred to in section 26A(2) of the Act

guarantee means a guarantee in relation to the relevant contract

guarantor means a guarantor in relation to the relevant contract

new creditor means the person to whom the transfer is made

payment means a payment—

(a)

under the relevant contract by a debtor; or

(b)

under a guarantee by a guarantor

relevant contract means the consumer credit contract to which the transfer relates.

Regulation 19: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations (No 2) 2015 (LI 2015/82).

20 Contract manager appointed by new creditor

(1)

This regulation applies if—

(a)

conditions A to D are met; and

(b)

condition E is met, subject to subclause (7).

(2)

Condition A is that, at the disclosure deadline, there is a contract (the management contract) between the new creditor and another person (the contract manager) that provides for the contract manager, during the period after the disclosure deadline until the end of the term of the management contract or until that contract ends in some other way,—

(a)

to collect all payments from every debtor and guarantor; and

(b)

otherwise to manage the relevant contract and every guarantee; and

(c)

to deal with every debtor and guarantor for those purposes accordingly.

(2A)

Condition AA is that that management contract, if it is entered into or varied after commencement of this subclause, requires the contract manager to comply with the Act as if the contract manager were also a creditor.

(3)

Condition B is that, no later than the disclosure deadline, the contract manager’s name, address, and other contact details are disclosed to every debtor and guarantor.

(4)

Condition C is that,—

(a)

immediately before the transfer takes effect, the contract manager is already performing the role referred to in subclause (2)(a) to (c) (as a creditor under the relevant contract or under a contract with such a creditor); or

(b)

no later than the disclosure deadline, every debtor and guarantor is advised of the contract manager’s role as referred to in subclause (2)(a) to (c).

(5)

Condition D is that,—

(a)

at the disclosure deadline, the contract manager—

(i)

is registered under the register of financial service providers; and

(ii)

is a member of a dispute resolution scheme; and

(b)

at the disclosure deadline,—

(i)

the contract manager is a creditor under the relevant contract; or

(ii)

the rules of the scheme referred to in paragraph (a)(ii) relating to complaints about its members apply in relation to the contract manager (whether by virtue of a provision of the rules themselves or by virtue of other arrangements)—

(A)

as if the contract manager were the creditor under the relevant contract; and

(B)

so that the scheme must accept for resolution, and the contract manager is bound by the resolution of, complaints on that basis accordingly.

(6)

Condition E is that, no later than the disclosure deadline, the following information is disclosed to every debtor and guarantor:

(a)

the contract manager’s registration number under the register of financial service providers and the name under which the contract manager is registered under that register:

(b)

the name and contact details of the dispute resolution scheme of which the contract manager is a member.

(7)

Condition E does not have to be met if—

(a)

the relevant contract is entered into before 6 June 2015; and

(b)

subclause (4)(a) applies.

Regulation 20: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations (No 2) 2015 (LI 2015/82).

Regulation 20(2A): inserted, on 1 December 2021, by regulation 9 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

21 New creditor was contract manager before transfer

(1)

This regulation applies if—

(a)

conditions A and B are met; and

(b)

condition C is met, subject to subclause (5).

(2)

Condition A is that, immediately before the transfer takes effect, the new creditor (under a contract with a person who is a creditor under the relevant contract)—

(a)

is collecting all payments from every debtor and guarantor; and

(b)

is otherwise managing the relevant contract and every guarantee; and

(c)

is dealing with every debtor and guarantor for those purposes accordingly.

(3)

Condition B is that, no later than the disclosure deadline, the new creditor’s name, address, and other contact details are disclosed to every debtor and guarantor.

(4)

Condition C is that, no later than the disclosure deadline, the following information is disclosed to every debtor and guarantor:

(a)

the new creditor’s registration number under the register of financial service providers and the name under which the new creditor is registered under that register:

(b)

the name and contact details of the dispute resolution scheme of which the new creditor is a member.

(5)

Condition C does not have to be met if the relevant contract is entered into before 6 June 2015.

Regulation 21: inserted, on 6 June 2015, by regulation 4 of the Credit Contracts and Consumer Finance Amendment Regulations (No 2) 2015 (LI 2015/82).

Other provisions about securitisation or covered bond arrangements or similar arrangements

Heading: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

22 Application of section 59B of Act in certain circumstances
Circumstances in which section 59B(4) of Act applies

(1)

Subclause (2) prescribes circumstances for the purpose of section 59B(4) of the Act.

(2)

The circumstances are that—

(a)

there is a contract, for the purposes of securitisation or covered bond arrangements or similar arrangements, between a creditor (C) and a person (a contract manager) that—

(i)

provides for the contract manager to collect all payments from every debtor and guarantor under 1 or more consumer credit contracts; and

(ii)

provides for the contract manager otherwise to manage those consumer credit contracts and every guarantee; and

(iii)

if the contract was entered into or varied after commencement of this regulation, requires the contract manager to comply with the Act as if the contract manager were also a creditor; and

(iv)

provides for the contract manager to deal with every debtor or guarantor for those purposes accordingly.

How section 59B of Act applies in those circumstances

(3)

In the circumstances prescribed in subclause (2),—

(a)

section 59B of the Act does not apply to the directors and senior managers of C:

(b)

section 59B of the Act applies to the directors and senior managers of the contract manager as follows:

(i)

those directors and senior managers must exercise due diligence to ensure that the duties and obligations of a creditor under the Act are complied with:

(ii)

section 59B(2)(a) of the Act applies as if the nature of the business to be taken into account were the contract manager’s business (for example, its size) and the nature of the consumer credit contracts that are subject to the securitisation, covered bond arrangements, or similar arrangements:

(c)

the Act (including section 116A) applies to the directors and managers of the contract manager in respect of any breach of section 59B.

General provision

(4)

Subclause (3)(b) and (c) applies regardless of whether the contract manager is a creditor under the relevant contract or whether the contract between C and the contract manager requires the contract manager to comply with the Act as if the contract manager were also a creditor.

Regulation 22: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Disclosure before debt collection starts

Heading: inserted, on 1 December 2021, by regulation 11 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

23 Disclosure before debt collection starts

(1)

All of the following information is the information that must be disclosed under section 132A of the Act concerning the contract as is applicable:

Information about credit contract

(a)

the full name and contact details of the creditor at the date of the credit contract:

(b)

the date of the credit contract:

(c)

information that will help the debtor identify the credit contract (for example, the debtor’s purpose of the credit when the credit contract was entered into or the product type or name):

Statement about debt to be collected

(d)

a statement as required by subclause (3) or (4):

Information about debt collection

(e)

the full name and contact details of the debt collector:

(f)

information about ways in which the debtor can make a complaint about the debt collector, including—

(i)

unless the Financial Service Providers (Registration and Dispute Resolution) Act 2008 does not require the creditor to be a member of a dispute resolution scheme, a statement to the effect that—

(A)

the debtor has access to a free, independent dispute resolution service; and

(B)

that service may help to investigate or resolve the complaint (if it is not resolved to the debtor’s satisfaction using the creditor’s internal complaints process); and

(C)

the name and contact details of the dispute resolution scheme of which the creditor is a member:

(ii)

the contact details of the Commerce Commission:

Other information

(g)

a statement of the debtor’s right under section 55 of the Act, and advice as to how an application under that section may be made:

(h)

a statement to the effect that, if the person has concerns about their finances, they can get free and confidential advice from an independent service:

(i)

the name and contact details of a building financial capability service funded by the Ministry of Social Development that provides such a service.

(2)

The contact details referred to in subclause (1)(i) must be provided on the first page of the disclosure statement (or near the front if the statement has no pages).

Statement about debt to be collected

(3)

If the contract is a consumer credit contract in connection with which continuing disclosure under section 18 of the Act is required, the statement required by subclause (1)(d) must disclose—

Matters disclosed under section 19

(a)

the following information for the period (the statement period) starting with the closing date of the period covered by the last continuing disclosure statement under section 19 of the Act and ending with the date on which the disclosure under section 132A of the Act is made:

(i)

the opening and closing dates of the statement period; and

(ii)

the opening and closing unpaid balances; and

(iii)

the date, amount, and a description of each advance during the statement period; and

(iv)

the date and amount of each interest charge debited to the debtor’s account during the statement period; and

(v)

the date and amount of each amount paid by the debtor to the creditor, or credited to the debtor, during the statement period; and

(vi)

the date, amount, and a description of each fee or charge debited to the debtor’s account during the statement period; and

Extra information

(b)

to the extent that the amounts referred to in paragraph (a) do not include any default fees yet to be debited, the total amount of those fees, and the total amount to be collected (as increased by those further fees), to the extent that those amounts are ascertainable at the time of disclosure; and

(c)

the rates of any ongoing interest charges, credit fees, and default fees that will be charged under the contract, to the extent that they are ascertainable at the time of disclosure.

Example

Debt collection is about to start in June under a consumer credit contract. The last continuing disclosure statement was on 1 May.

Section 132A disclosure is made on 1 June. The unpaid balance is now $100 (which must be disclosed under paragraph (a)(ii)). The unpaid balance includes default fees of $10 that the creditor debited on 25 May (which must be disclosed under paragraph (a)(vi)).

The contract provides that, if debt collection starts, further default fees totalling $15 can be debited. Those fees are ascertainable. Those total default fees of $15 must be disclosed under paragraph (b), along with the total amount to be collected, which is $115 ($100 as increased by $15).

The contract also provides that, if debt collection starts, charges of $1 per phone call, and default interest charges of y% of the unpaid balance, may be debited. It is not ascertainable how many telephone calls may be needed. The rate of $1 per telephone call and the rate of y% must be disclosed under paragraph (c).

(4)

If the contract is not a consumer credit contract in connection with which continuing disclosure under section 18 of the Act is required, the statement required by subclause (1)(d) must disclose—

(a)

the unpaid balance before any default fees relating to the debt collection are debited to the debtor under the contract; and

(b)

the total amount of any default fees to be debited to the debtor under the contract, and the total amount to be collected (as increased by those further fees), to the extent that those amounts are ascertainable at the time of disclosure; and

(c)

the rates of any ongoing interest charges, credit fees, and default fees that will be charged under the contract, to the extent that they are ascertainable at the time of disclosure; and

(d)

if section 21(1)(b) of the Act applies, information about the website at which the debtor can access information under that section.

Regulation 23: inserted, on 1 December 2021, by regulation 11 of the Credit Contracts and Consumer Finance Amendment Regulations 2020 (LI 2020/205).

Matters in respect of Part 5A of Act (certification and fit and proper person requirements)

Heading: inserted, on 1 June 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Certification) Amendment Regulations 2021 (LI 2021/88).

24 Fee for applications for certification

(1)

The fee in respect of an application for certification under section 131F of the Act is $1,055 for each person who is one of the applicant’s directors, senior managers, or proposed directors or senior managers.

(2)

The fee does not include goods and services tax.

(3)

The applicant must pay the fee to the Commission when the application for certification is made.

Regulation 24: inserted, on 1 June 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Certification) Amendment Regulations 2021 (LI 2021/88).

25 Which changes in circumstances must be notified

(1)

This regulation applies for the purpose of section 131R of the Act (which requires a certified person to notify the Commission about any prescribed change in circumstances (for example, a change in directors or senior managers) relating to a certified person).

(2)

The prescribed changes are that—

(a)

a director or senior manager of a certified person—

(i)

is appointed; or

(ii)

has resigned, is removed, or otherwise ceases to hold the office or position; or

(iii)

has been charged with, or convicted of, a crime punishable by imprisonment in New Zealand or overseas; or

(iv)

is adjudicated bankrupt or is likely to be adjudicated bankrupt (whether in New Zealand or overseas); or

(v)

is a director or senior manager of a corporate entity that has been placed into liquidation, receivership, or voluntary administration in New Zealand or overseas; or

(vi)

has been prohibited from acting as a director or promoter of a company or taking part directly or indirectly in the management of a company in New Zealand or overseas; or

(vii)

has been prohibited from providing credit or other financial services in New Zealand or overseas; or

(viii)

is a director or senior manager of another corporate entity, and a relevant proceeding or action has been commenced or taken against either or both of that corporate entity or that person as a director or senior manager of that corporate entity; or

(b)

a relevant proceeding or action has been commenced or taken against any or all of the certified person or a director or senior manager of a certified person.

(3)

In subclause (2), relevant proceeding or action means any of the following (other than a proceeding commenced, or action taken, by the Commerce Commission):

(a)

a civil or criminal proceeding or regulatory action (whether in New Zealand or overseas) in relation to the contravention, or involvement in the contravention, of any—

(i)

consumer credit and fair trading laws; or

(ii)

financial markets legislation; or

(iii)

overseas law that regulates the supply of any financial service, any dealing in financial products, or the management of an entity:

(b)

a regulatory or disciplinary action for a breach of a professional or industry code of conduct or the rules of a financial product market (whether in New Zealand or overseas):

(c)

a criminal proceeding for a crime involving dishonesty.

Regulation 25: inserted, on 1 June 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Certification) Amendment Regulations 2021 (LI 2021/88).

26 Fee for notifying changes in circumstances

(1)

The fee in respect of a notification under section 131R of the Act is $1,055 for each director or senior manager who is appointed.

(2)

The fee does not include goods and services tax.

(3)

The certified person must pay the fee to the Commission when the notification is given.

Regulation 26: inserted, on 1 June 2021, by regulation 4 of the Credit Contracts and Consumer Finance (Certification) Amendment Regulations 2021 (LI 2021/88).

27 Exemption from certification if securitisation or covered bond arrangements or similar arrangements

A person (C) is exempt from the certification requirement under section 131B of the Act to the extent of services that C provides in the following circumstances:

(a)

there is a contract, for the purposes of securitisation or covered bond arrangements or similar arrangements, between C and a person (a contract manager) that meets the requirements set out in regulation 22(2); and

(b)

the contract manager is either certified under section 131B of the Act or exempt from that certification requirement under section 131C of the Act.

Regulation 27: inserted, on 1 October 2021, by regulation 7 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

28 Exemptions if credit provided, on interim basis, by non-financial service business

(1)

This regulation applies if—

(a)

a person whose only or principal business is the provision of goods or services that are not financial services (within the meaning of section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008) (R) provides credit under consumer credit contracts to its customers in order to facilitate the provision of goods or services to those customers; and

(b)

R and another person (C) have agreed in writing that—

(i)

C will comply with, or ensure that R complies with, the lender responsibilities under section 9C of the Act before the consumer credit contracts are entered into; and

(ii)

C will make the final lending decisions, including being satisfied that it is likely that the test in section 9C(3)(a) or (5)(a) of the Act (as the case may be) is met (for example, that it is likely that the credit or finance provided under the agreement will meet the borrower’s requirement and objectives and that the borrower will make the payments under the agreement without suffering substantial hardship); and

(c)

it is a term of the consumer credit contracts that R will assign the consumer credit contracts to C; and

(d)

it is within the ordinary course of R’s business for that assignment to take place within 1 working day of providing the credit; and

(e)

C is registered as a creditor on the register of financial service providers, and is a member of a dispute resolution scheme, under the Financial Service Providers (Registration and Dispute Resolution) Act 2008; and

(f)

C is certified under section 131B of the Act or exempt from that certification requirement under section 131C of the Act.

(2)

To the extent of services that R provides under consumer credit contracts described in subclause (1), R is exempt from the certification requirement under section 131B of the Act.

(3)

To the extent of services that R provides under consumer credit contracts described in subclause (1), the directors and senior managers of R are exempt from the duty under section 59B of the Act.

(4)

C is a creditor under those consumer credit contracts from the time when the relevant consumer credit contract is entered into.

Regulation 28: inserted, on 1 October 2021, by regulation 7 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Regulation 28(3): inserted, on 1 December 2021, by regulation 8 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Regulation 28(4): inserted, on 1 December 2021, by regulation 8 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Annual returns

Heading: inserted, on 1 December 2021, by regulation 9 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

29 Requirements in relation to annual returns

(1)

This regulation prescribes requirements in relation to annual returns for the purposes of section 116AAA of the Act.

(2)

The date by which the annual return must be provided is 30 June in each year.

(3)

The 12-month period to which an annual return must relate is the preceding 1 April to 31 March.

(4)

An annual return must contain the following information:

(a)

the number of high-cost consumer credit contracts and related consumer credit contracts entered into; and

(b)

the number of other credit contracts entered into that are consumer credit contracts or contracts that the creditor has treated as consumer credit contracts; and

(c)

the number of material changes (within the meaning of section 9C(8) of the Act) to credit contracts that are consumer credit contracts or contracts that the creditor has treated as consumer credit contracts; and

(d)

for each type of credit contract entered into, or material change to a credit contract, that is described in paragraphs (a) to (c),—

(i)

the total dollar amount to be advanced, or total credit limit, as applicable; and

(ii)

the number of times that the creditor has relied on each exception in these regulations (see regulations 4AF(1)(b), 4AG, and 4AH) from the requirements in either or both of regulation 4AF (general rule: full income and expense estimates required in certain cases) and 4AI (general rule in other cases).

Regulation 29: inserted, on 1 December 2021, by regulation 9 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Schedule 1AA Transitional, savings, and other related provisions

r 2A

Schedule 1AA: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Part 1 Provisions relating to Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020

Schedule 1AA Part 1: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

1 Certain agreements where inquiries substantially completed before 1 December 2021

(1)

This clause applies if,—

(a)

before 1 December 2021, a lender substantially completes reasonable inquiries into the matters referred to in section 9C(3)(a) or (5)(a) of the Act (as the case may be) in relation to an agreement or insurance contract and is satisfied that it is likely that the test in those provisions is met (for example, that it is likely that the credit or finance provided under the agreement will meet the borrower’s requirement and objectives and that the borrower will make the payments under the agreement without suffering substantial hardship); and

(b)

before 1 June 2022,—

(i)

the lender enters into the agreement or insurance contract, or makes the material change to the agreement, in relation to which the inquiries were made; or

(ii)

the lender offers, for the purpose of enabling the acquisition of identified land or residential premises or the construction or alteration of a building or structure on identified land, to enter into the agreement, or to make the material change to the agreement, in relation to which the inquiries were made; and

(c)

if paragraph (b)(ii) applies, the lender eventually enters into that agreement, or makes that material change, for the same purpose (namely, in respect of the same identified land or residential premises).

(2)

Regulations 4AA, 4AB, 4AF, and 4AI do not apply to the lender unless the lender ceases to be satisfied (for example, because of a change in the borrower’s financial circumstances) that it is likely that the test in section 9C(3)(a) or (5)(a) of the Act is met.

(3)

This clause does not limit the interpretation of the requirement in section 9C(3) that reasonable inquiries must be made before entering into the agreement.

Schedule 1AA clause 1: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Part 2 Provisions relating to Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021

Schedule 1AA Part 2: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

2 First annual return due 30 June 2024

(1)

This clause prescribes requirements in relation to annual returns for the purposes of section 116AAA of the Act.

(2)

The date by which the first annual return must be provided is 30 June 2024.

(3)

The 12-month period to which that first annual return must relate is 1 April 2023 to 31 March 2024.

(4)

Despite regulation 29, there are no requirements for annual returns for periods ending 31 March 2021 or 31 March 2022 or 31 March 2023.

Schedule 1AA clause 2: inserted, on 1 December 2021, by regulation 10 of the Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021 (LI 2021/279).

Schedule 1 Assumptions that may be used or applied when disclosing information under Act

r 6

Schedule 1 number: added, on 1 April 2005, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations 2004 (SR 2004/359).

1 Interest charges and payments

In disclosing the information referred to in paragraphs (k), (l), and (o) of Schedule 1 of the Act, the creditor may assume—

(a)

that, in the case of an annual interest rate, the rate disclosed will not vary over the term of the credit contract or any shorter period for which it applies; and

(b)

that, in the case of a variable interest rate, the variable interest rate applicable over the period for which it applies is the same as the equivalent variable interest rate as at the date that the disclosure statement is prepared; and

(c)

that the debtor will make payments required by the credit contract at the times required by the credit contract and of the amounts required under the contract.

2 Business day

Disclosure relating to payments, charges, or fees may be made on the assumption that every day is a business day.

3 Charges and fees

Disclosures relating to charges (other than interest charges) and fees may be made on the following assumptions:

(a)

that there will be no change in the charges and fees as disclosed and no new fees or charges imposed; and

(b)

that the charges and fees will be paid by the debtor at the times required by the credit contract and of the amounts required under the contract.

4 Date of advance being made

If disclosure involves an advance being made under the credit contract on a certain date and that date is not ascertainable at the time the disclosure statement is prepared, disclosure may be made on the assumption that the advance is made on a date specified in the disclosure statement as being the date on which the advance is most likely to be made.

Schedule 2 Model disclosure statements

r 12

Schedule 2: replaced, on 28 August 2015, by regulation 5 of the Credit Contracts and Consumer Finance Amendment Regulations (No 3) 2015 (LI 2015/181).

Form 1

Disclosure Statement for Consumer Credit Contracts (other than revolving credit contracts) Page 1 of 5
Disclosure Statement for Consumer Credit Contracts (other than revolving credit contracts) Page 2 of 5
Disclosure Statement for Consumer Credit Contracts (other than revolving credit contracts) Page 3 of 5
Disclosure Statement for Consumer Credit Contracts (other than revolving credit contracts) Page 4 of 5
Disclosure Statement for Consumer Credit Contracts (other than revolving credit contracts) Page 5 of 5

Form 2

Disclosure Statement for Revolving Credit Contracts Page 1 of 4
Disclosure Statement for Revolving Credit Contracts Page 2 of 4
Disclosure Statement for Revolving Credit Contracts Page 3 of 4
Disclosure Statement for Revolving Credit Contracts Page 4 of 4

Diane Morcom,
Clerk of the Executive Council.

Issued under the authority of the Legislation Act 2019.

Date of notification in Gazette: 12 August 2004.

Notes
1 General

This is a consolidation of the Credit Contracts and Consumer Finance Regulations 2004 that incorporates the amendments made to the legislation so that it shows the law as at its stated date.

2 Legal status

A consolidation is taken to correctly state, as at its stated date, the law enacted or made by the legislation consolidated and by the amendments. This presumption applies unless the contrary is shown.

Section 78 of the Legislation Act 2019 provides that this consolidation, published as an electronic version, is an official version. A printed version of legislation that is produced directly from this official electronic version is also an official version.

3 Editorial and format changes

The Parliamentary Counsel Office makes editorial and format changes to consolidations using the powers under subpart 2 of Part 3 of the Legislation Act 2019. See also PCO editorial conventions for consolidations.