14 August 2003 Media Statement

Amendment to deal with ‘buy-back’ schemes

The second reading of the Consumer Credit Bill today introduced a significant amendment dealing with housing buy-back schemes, said Consumer Affairs Minister Judith Tizard.

“The government recently placed eight companies participating in buy-backs into statutory management,” said Judith Tizard. “A large number of consumers are affected by these schemes and have lost or may lose their homes. Without new measures in the Bill, there is potential for further detriment.

“Commerce Minister Lianne Dalziel and I signalled in June that an amendment to the Consumer Credit Bill might provide legislative cover for housing buy-back schemes.

“The Commerce Select Committee has recommended amendments that will protect consumers against future losses from buy-backs, as well as providing remedies for consumers already involved in buy-backs,” said Judith Tizard.

The Bill will:
- Require disclosure of information about buy-backs
- Require the provision of independent legal advice for consumers entering into buy-backs, and require solicitors to certify that the advice has been given
- Prevent the transfer of property without the Court’s permission where initial disclosure has not been made or independent legal advice has not been provided
- Ensure that remedies against oppressive conduct in Part 5 of the Bill apply to buy-backs.

“Funding for the Commerce Commission to enforce the Consumer Credit Bill was secured in Budget 2003 earlier this year. I am also pleased to announce that extra funding has been approved to enforce these new provisions to deal with buy-back schemes.

“I am confident that, when passed, this Bill will enhance the ability of consumers to understand the nature and risks of a buy-back transaction, while reducing the attractiveness of these schemes to financiers,” said Judith Tizard. “I predict that the combination is likely to see this form of finance leave the market.”

ENDS

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