Tougher rules have come into force in the consumer credit sector, with new requirements for lenders to ensure they lend responsibly.
All lenders and most mobile traders are required to comply with the laws, says the Commerce Commission. (File image) Photo: 123RF
Among the changes from today, lenders will no longer be able to solely rely on information given by the borrower to show they have made reasonable inquiries about the affordability of loans.
Minimum advertising standards are also being introduced, and lenders must keep records showing they have checked affordability and suitability of loans.
Lenders will also need to take reasonable steps to provide information about the loan borrowers in the same language as they advertise in.
Commerce Commission chair Anna Rawlings said this was the final suite of changes the government was introducing for the sector.
"They're all intended to improve the workability of consumer credit protections for borrowers and also to help lenders to comply by providing some additional information to them about what they need to do," Rawlings said.
"In particular, it's in relation to how they might meet their responsible lending requirements to make sure that loans are suitable to meet their customers needs and they can afford to repay them."
The changes around the information provided to lenders when they assess customers' affordability, would benefit borrowers because it would ensure they could repay the loan, Rawlings said.
"Borrowers also need to be clear that when they take out a loan from today, they're going to need to find out what information they need to provide to the lender.
"They'll need to be a bit patient while learning the process of that information and ask some more questions to collect relevant information."
All lenders and most mobile traders are required to comply with the laws, Rawlings said.
The full list of changes can be found on the Commerce Commission website.
