The Law Commission has worked closely with the Ministry of Economic Development in a project to rewrite the Credit (Repossession) Act 1997, which has been found to have many practical difficulties with it.
Review of the Credit (Repossession) Act 1997 (NZLC IP25, 2011)
The Commission's Issues Paper, Review of the Credit (Repossession) Act 1997 (NZLC IP25, 2011).
Among the questions the Commission is asking the public to consider is whether there should be a ban on the repossession of certain basic items, such as children’s belongings and medical necessities; and whether the law should more clearly state that the taking of other items is prohibited, such as passports and eftpos cards.
The Commission is working alongside the Ministry of Consumer Affairs, reviewing the Credit (Repossession) Act 1997. This is part of the wider review of consumer credit law announced by Commerce and Consumer Affairs Minister Hon Simon Power last month.
Issues on which feedback is sought include whether:
- household items or tools of trade up to a certain value should be protected from repossession;
- consent of a court should be required for repossession in all cases, as in both Australia and England, or in cases where a certain amount of equity has been built up in the goods;
- whether rights of entry on to private property should be contractually conferred, or dealt with in the Act;
- the fitness of a credit provider should be assessed, or their financial services registration affected, by misconduct when they repossess goods;
- there should be oversight and enforcement by the Commerce Commission or another body;
- the Credit (Repossession) Act should be incorporated into the Credit Contracts and Consumer Finance Act, which is being reviewed by the Ministry of Consumer Affairs.
Consumers and Repossession: A Review of the Credit (Repossession) Act 1997 (NZLC R124, 2012)
The Commission's Report, Consumers and Repossession: A Review of the Credit (Repossession) Act 1997 (NZLC R124, 2012), recommends wide-ranging changes to New Zealand’s credit repossession laws, with a view to establishing a fairer, more transparent and efficient regime for all parties.
Under the proposed changes, consumers entering credit contracts would have to be told explicitly when repossession could occur, and which goods could be repossessed.
The Commission is also recommending that some goods, such as bedding, washing machines, portable heaters, passports and identity documents, should not be subject to repossession at all.
If the Commission’s recommendations are accepted by the Government, in the future repossession agents will need to be licensed and could lose their licence for breaching the new laws.
The recommendations arise from the Commission’s review of the Credit (Repossession) Act 1997. This forms part of the Government’s wider review of consumer credit law, led by the Ministry of Consumer Affairs.
The Commission is recommending that the 1997 Act be repealed and that provisions covering the repossession and sale of goods be incorporated into the Government’s proposed amendments to the Credit Contracts and Consumer Finance Act.
There is no requirement for the Government to present a formal response to a Commission report where it has accepted the Commission’s recommendations. (See Official Government response process | Department of the Prime Minister and Cabinet (DPMC).)
The overall scheme proposed by the Commission was implemented as part of amendments to the Credit Contracts and Consumer Finance Act 2003, regulations made under the Act and in the development of the Responsible Lending Code.