Lenders providing consumer credit, and mobile traders selling on credit, will soon need to be certified by the Commerce Commission to do so – unless already licensed by the Financial Markets Authority or Reserve Bank of New Zealand.
The new requirement will be introduced on 1 October 2021. From this date, entities that register on the Financial Service Providers Register (FSPR) must also gain certification from the Commerce Commission that their directors and senior managers are ‘fit and proper’ persons to perform their roles. Businesses that are unable to satisfy this requirement will be unable to act as creditors in consumer credit contracts.
Entities providing this service that are already registered on the FSPR on 1 October will have until their next annual confirmation to obtain certification.
All lenders should consider applying at least 2 months before they need to be certified, to ensure they can continue trading while the Commission completes the certification process. If they apply less than 2 months before certification is required, they’ll need to stop trading until certification has been granted.
Providing services without being certified could result in penalties of up to $600,000 for a company and $200,000 for an individual.
The certification requirement is one of a number of changes the Government has made to the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to provide greater protection to borrowers.
To find out more about these changes, and how they could affect you, please visit the Commerce Commission website.
More information, including guidance on how to apply for certification, will be made available on the FSPR website prior to the new regulatory requirements.