Credit repossession
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| Q.15 Should there be more specific disclosure of personal property that may be taken as security by a creditor if a debtor is in default in the credit contract? Should the Credit (Repossession) Act provide that personal property cannot be seized unless it has been sufficiently described in the security agreement? |
Across the board, consumer representatives and submissions from legal professionals supported the itemisation of security in both the credit contract and the notices required to be given during and after the repossession process.
Banks did not support the proposal. One noted that the requirements round the Personal Property Securities Act (PPSA) should be more greatly emphasised by enforcement activity and that prudent lenders should already be accurately identifying security. Another suggested that the PPSA is sufficient and that it is not necessary to list all present security as this is covered by the PPSA and that any after acquired security has to be specifically appropriated, therefore no change was necessary. Another bank noted that the law in this area can be confusing for consumers and lenders alike and suggested that the review also consider the effect of the PPSA and the Property Law Act 2007.
Finance companies suggested that they understood that ‘all present and after acquired property' clauses were not appropriate for use in consumer contracts and some felt the law was sufficient in this area. A couple of submitters did support the need for more specific disclosure. One suggested an alternative to the proposal; that ‘essential household property' should not be able to be repossessed.
Other industry representatives were mixed in their response. Some supported more descriptive practices, others felt the law was sufficient.
