A temporary exemption is being made to the Credit Contracts and Consumer Finance Act (CCCFA) to allow banks and other lenders to quickly lend money to affected consumers to address damage, replace property, provide for loss of income, and meet their everyday living costs, the Government announced today.
It says the move will make it easier for people in financial difficulty as a result of the catastrophic flooding to get temporary credit.
The exemption removes the requirement for extensive assessments for temporary credit of up to $10,000.
“We’ve worked closely with the sector on this exemption so consumers can expect to access credit more easily in the coming days,” said Commerce and Consumer Affairs Minister, Duncan Webb.
“While the exemption does not cap interest rates or fees, I have asked the banking sector for assurances that interest rates will be at usual or possibly lower rates. So far the response has been positive with one bank indicating their overdrafts will be interest free,” he said.
All lenders who provide overdrafts or home loans are covered by the exemption, including banks, building societies, credit unions and other non-bank deposit takers.
This support will reinforce other Government relief to affected residents, like that provided through the Mayoral Relief Fund for essential needs like food, clothing and cleaning up damaged properties, the Minister said.
“We have had extensive consultation over this measure and our priority is that everyone who needs to access finance can under this exemption.”
“I would encourage people who have been affected by flooding and for whom other support is not available or not adequate for their needs to check with their lender to see what support or temporary lending options are available to them,” Mr Webb said.
The exemption will apply to temporary overdrafts provided for 12 months or less, and to home loan top-ups to be repaid over a reasonable period, and must be entered into before 31 March 2023. The support is for existing customers affected by the flooding in January and February 2023.
The exemptions currently are limited to the Upper North Island. Minister Webb will be taking a further exemption to Cabinet on Monday which would mean everyone affected by the floods will be covered.
Consumers will be protected under the safeguard conditions that are part of exemption regulations. Lenders must comply with the Responsible Lending Code regarding identifying and responding to financial difficulties.