The New Zealand Banking Association today welcomed the government’s decision to accept the Finance and Expenditure Committee’s recommendation to fix an anomaly in the Credit Contracts and Consumer Finance Act. This will confirm disclosure errors for loans will be treated in the same way whether they occurred before or after 2019.
New Zealand Banking Association chief executive Roger Beaumont says: “The government saw that the law was inconsistent and unfair, and they’ve mostly fixed it. We welcome that decision.
“However, we are disappointed that the government has decided to exclude the ongoing court cases. The principle of a just and equitable approach should be confirmed to apply to all. Government officials recommended that existing cases be included in the law change, and the government previously accepted that advice.
“Between 2015 and 2019 any lender who made even a small mistake in the information provided to borrowers, like getting their middle name wrong, could be subject to a draconian provision in the law that, on one interpretation, would make them repay all the interest and fees paid until the error was corrected. That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer.
“It’s important to note that this law change will not stop consumers or regulators taking action against lenders for information disclosure breaches. It merely confirms that the courts should apply a ‘just and equitable’ approach. It would be up to the courts, as it should be.
“This change benefits all New Zealand lenders. It helps smaller banks, credit unions, and building societies. Alongside lenders of all sizes, we have been advocating to correct this anomaly in the law since it was introduced 10 years ago.”
ENDS