Page 50 - English-DBINZ brochure-2019

47 Doing business in New Zealand

Penalties
The Commerce Commission enforces the Fair Trading Act. Individuals may also bring private actions
under the Act.
Courts can impose fines of up to NZ$600,000 and may grant other remedies, such as injunctions,
damages and corrective advertising orders. The Commerce Commission may issue infringement offences
for breaches of some provisions of the Act.

CREDIT CONTRACTS AND CONSUMER FINANCE ACT 2003
The primary purpose of the Credit Contracts and Consumer Finance Act 2003 (CCFA) is to protect the
interests of consumers in connection with credit contracts, consumer leases, and buy-back transactions
of land. The core provisions of the CCCFA do not apply to business transactions (with the exception of
the provisions relating to oppression and repossession, which apply to contracts relating to “consumer
goods”, including when purchased by a business). The core provisions only apply to credit contracts that
are “consumer credit contracts”. Consumer credit contracts are contracts entered into by individuals
wholly or predominantly for personal, domestic or household purposes.

A credit contract is any contract under which credit is or may be provided. Credit is defined under the
CCCFA and means a right granted by a person to another person to:

ə Defer payment of a debt
ə Incur a debt and defer its payment
ə Purchase property or services and defer payment for that purchase (in whole or in part).
The CCCFA contains a provision that if a party alleges that a credit contract entered into by an individual
is a consumer credit contract, it will be presumed to be a consumer credit contract until proven
otherwise. However, under the CCCFA a creditor may rely on a declaration from the debtor, obtained in
accordance with the CCCFA, that the contract is for business or investment purposes, unless the creditor
has reason to believe otherwise.
The CCCFA imposes a number of restrictions and obligations on creditors under consumer credit
contracts. These include restrictions on the level of fees that can be charged by a creditor and various
disclosure obligations.
The CCCFA requires lenders to comply with “lender responsibility principles” when entering into
consumer credit contracts (and certain limited other contracts). The principles include: exercising
the reasonable care, diligence and skill of a responsible lender; assisting the borrower to reach an
informed decision; and treating the borrower (and their property) reasonably and in an ethical manner.
The Minister of Commerce and Consumer Affairs publishes a Responsible Lending Code, which sets out
guidance on how lenders can implement the lender responsibility principles. The Code is not binding,
but compliance with the Code is viewed as evidence that a lender has complied with the principles.
Penalties
The Commerce Commission enforces the CCCFA. Individuals may also bring private actions under the
CCCFA.
Courts can impose fines of up to $600,000, and may grant other remedies such as amending the terms
of a credit contract, injunctions, or prohibiting enforcement of certain terms.