Credit Contracts and Consumer Finance Act 2003: Proposed Regulations

November 2003

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Introduction

This discussion document outlines the content of regulations that are proposed to be made under the Credit Contracts and Consumer Finance Act 2003 (CCCF Act). The regulations relate to:

• The formula which creditors may use to calculate the charge payable by the debtor on full prepayment (early repayment).
• The formula that must be used by creditors in calculating a proportionate rebate of a consumer credit insurance contract (payable in the event of full prepayment where there is a consumer credit insurance contract financed under the credit contract).
• Allowable assumptions that may be relied on by creditors when making disclosure.

The document is divided into three sections as follows:

1. Safe harbour formula for calculating a creditor's loss resulting from a full prepayment
2. Rebate of consumer-credit insurance premium in the event of early repayment
3. Allowable assumptions.
4. Other regulations

Each section of the document explains the proposals. Regulations are also proposed for "model forms" that may be used by creditors when making disclosure under the Act. These regulations are still being developed and proposals will be ready for consultation at a later date in 2004.

Submitters comments are welcome on all aspects of the proposed regulations by Friday 6 February 2004. The intention is to have the regulations drafted and in place as soon as possible following this consultation.

Written comments should be addressed to:

Queries can be directed to Cindy O'Brien or Nick McBride (ph 04-474 2818; email nick.mcbride@med.govt.nz).

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