The NZ Government has put forward a draft law change that will go before Parliament next year that looks to crack down on repossession crews taking people's passports, medical gear, bedding, ovens and fridges, as well as introducing tougher penalties and a licensing regime.
Under the proposal, the Credit (Repossession) Act will be merged with a bigger draft consumer law planned to be introduced to Parliament later this year or early next year; the Credit Contracts and Consumer Finance Bill. The proposed change would bring the whole life cycle of consumer credit contracts under a single law and make the Commerce Commission responsible for enforcing repossession rules.
- Items that can be repossessed will have to be itemised in loan and credit contracts, marking the end of "dragnet" clauses covering all personal property. The means that the historical use of an “All present and after acquired” security interest will no longer be relevant and individual security items will need to be registered on the PPSR.
- Certain items will not be able to be repossessed unless the loan was taken out specifically to buy them. Items likely to be on the banned list include medical equipment, bedding, portable heaters, stoves, washing machines, cooking equipment, refrigerators, passports, identity documents and credit and eftpos cards.
- Repossession agents will have to be licenced, of suitable character and without serious criminal convictions.
- Repossessions will come under the responsible lending principles in the Credit Contracts and Consumer Finance Bill. That means creditors and repossession agents will have to act responsibly when carrying out repossession and it may prevent agents taking virtually worthless items with sentimental value, such as children's toys.
- The Commerce Commission would be responsible for enforcing the laws surrounding the repossession of goods.
- Repossession agents will be subject to criminal offences, civil remedies and statutory damages if they break the rules around actions such as entering houses and taking items.
When introduced, there will be some major changes to the current repossession agents', processes and methods, so we will keep you informed with any additional information as it comes to hand.