Media Releases

15 October 2004

Improved credit disclosure benefits consumers and business

New information disclosure guidelines for credit products will give consumers a clearer understanding of what they are signing up for says Consumer Affairs Minister Judith Tizard.

The Credit Contracts and Consumer Finance Act 2003 requires businesses offering credit to consumers to clearly disclose key information to borrowers about the cost of credit and the borrower’s obligations under any credit contract they are entering into.

“The Act allows credit providers considerable flexibility in how they go about disclosing key information on credit products to consumers, provided that the disclosure is clear, concise and likely to bring the information to the attention of the borrower. The manner of disclosure must not be likely to mislead a consumer” Judith Tizard said.

New model disclosure statements approved by government this week will help businesses meet the standard required by the Act. Credit providers who use the forms correctly can be sure the information has been disclosed in the manner required by the Act.

“The advantage of using a model disclosure statement is that businesses will be treated as having complied with the disclosure standards required by the Act, which will in turn help reduce their compliance costs. It will also provide a standard of disclosure that will become familiar to consumer borrowers and assist them to choose between different credit products on offer.

“However, businesses also have the flexibility to adapt a model disclosure statement to suit their particular business needs.”

Giving consumers greater confidence in choosing between credit products should improve competition between credit providers, leading to more choice in this market.

“These model disclosure statements show the Government’s continued commitment to innovative and flexible business regulation while protecting the needs of consumers.”