Certification of directors and senior managers of consumer credit lenders

The Commerce Commission (Commission) is seeking feedback on criteria it will use to assess whether a lender is ‘fit and proper’ as part of a new certification regime being introduced under recent changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

From April 2021, the Commission must be satisfied that consumer credit providers (lenders) and mobile traders are fit and proper, which in turn requires that all directors and senior managers of lenders and mobile traders are ‘fit and proper’ unless exempt. A senior manager is a person who is not a director but occupies a position that allows them to exercise significant influence over the management or administration of a company or other person. Examples include a chief executive or a chief financial officer.

Lending without certification could result in penalties of up to $600,000 for a company or $200,000 for an individual.

The Commission has published a consultation document on this topic, which describes a ‘fit and proper’ person as:

  • financially sound
  • honest, reputable and reliable
  • competent to perform the role in question

This is broken down into two proposed categories for assessment:

  • probity, reputation and financial integrity
  • competency and capability

A director or senior manager’s prior convictions or disciplinary action, bankruptcy, or prior prohibition from providing credit, among others, are proposed considerations under the first category (whether in a personal capacity or as director of a company).

A director or senior manager’s relevant knowledge, experience and ability to understand the technical requirements of the business, objectivity in decision making and awareness of risk are proposed considerations under the second category.

The Commission is intending to provide guidance about the certification process and how it intends to apply the criteria in mid-2020. Submissions can be sent by email to fitandpropersubmissions@comcom.govt.nz and are due Wednesday 18 March 2020.

More information from the Commission and the consultation document can be found online.

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