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Responsible lending in the context of COVID-19 challenges

Home Insights Responsible lending in the context of COVID-19 challenges

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Contributed by: Emmeline Rushbrook and Nicole Browne

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Published on: April 03, 2020

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The Commerce Commission (Commission) has today issued guidance for lenders in relation to their responsible lending obligations in the current circumstances created by the COVID-19 pandemic and the Government's response to it. 
 
The guidance aims to assist lenders navigate the provision of support and flexibility to financially stressed borrowers. In doing so, the Commission recognises the need to maintain appropriate access to credit while also protecting borrowers’ interests under the Credit Contracts and Consumer Finance Act 2003 (CCCFA).
 
Crucially, the guidance acknowledges that the application of the responsible lending requirements in the CCCFA will be informed by the circumstances in which lenders, acting reasonably, are operating while COVID‑19 affects the New Zealand economy. In this respect, the guidance acknowledges that in the current circumstances complying with some of the guidance set out in the Responsible Lending Code may not be practicable. 
 
The Commission has also noted that its enforcement approach will be strongly informed by the circumstances that lenders are operating in while COVID-19 affects the New Zealand economy.
 
The guidance applies to all lenders, while the newly enacted Credit Contracts and Consumer Finance (Exemptions for COVID-19) Amendment Regulations 2020 provide exemptions from certain aspects of the CCCFA for registered banks only.
 
A link to the guidance is here. The Commission has indicated that it will be reviewed and supplemented regularly and that both lenders and borrowers should contact the Commission if further guidance is required. 
 
Please contact one of our experts if you wish to discuss this guidance or any other CCCFA issue further at this time. We recognise that, given the principles based nature of the lender responsibilities, lenders may continue to have questions about ensuring compliance in their individual circumstances and/or may be facing operational issues hindering compliance with other parts of the CCCFA at this time. 

 
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