What do you need to do?

The Act will soon become effective

With the exception of the buy-back transactions provisions, which are already in force, the provisions of the Credit Contracts and Consumer Finance Act 2003 (the Act) take effect on 1 April next year.

The Act deals mainly with credit contracts with natural persons, primarily for personal, domestic or household purposes (consumer credit contracts). However, the oppression provisions apply to all credit contracts.

If you enter into consumer credit contracts, you have less than five months to ensure that your documents and procedures comply with the Act. We understand that there are still a significant number of financiers who have not yet taken steps to do so.

For a summary of the issues you will need to take into account, click here to link to the Winter 2004 issue of Financial Services Quarterly.

Credit Contracts and Consumer Finance Regulations 2004 and Credit Contracts and Consumer Finance Amendment Regulations 2004

Effective 1 April 2005, new regulations made under the Act, which were very recently amended by amendment regulations, specify:

Publication of information

• Alternative requirements allowing for changes to interest rates or fees or charges payable by a debtor to be published by:
  
  
  • public display of the information at the creditor’s place of business; and
    
    
  • advertisement in certain daily newspapers; and
    
    
  • posting the information on the creditor’s website.

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

• A formula for determining a reasonable estimate of a creditor’s loss arising from full prepayment of a fixed rate contract.

Calculation of proportionate premium rebates

• A formula for determining the proportionate rebate of the premium paid under a consumer credit insurance contract.

Calculation of loss on full prepayment

• A formula for calculating a reasonable estimate of a creditor’s loss on full prepayment where the interest rate is fixed for the whole term.
  
  
• A formula for calculating a reasonable estimate of a creditor’s loss on full prepayment where the interest rate is fixed for part of the term.

Model disclosure statements

• two forms of model disclosure statements – one for use with revolving credit contracts and one for use with non-revolving credit contracts;
  
  
• terms and conditions for use of model disclosure statements; and
  
  
• certain assumptions that may be used or applied when disclosing information under the Act.

Enquiries and information

For more information on any of the cases, articles and features in Financial Services Quarterly, please email Rachel Gowing or call on 64 9 916 8825.