Responsible Lending

What Real Finance Limited must do to make sure your loan arrangements are both affordable and suitable for your needs.

Ensuring credit and loans , along with any complimentary insurance solutions are suitable for our borrowers

The Lender Responsibility Principles we follow make our responsibilities clear, specifically on whether a loan is affordable AND suitable for your needs. We apply these principles to all of our loan types.

Real Finance Limited is a registered Financial Services Provider – FSP3821

The Responsible Lending Code is a guide for lenders on how to comply with the Lender Responsibility Principles, which was developed by the Ministry of Business Innovation and Employment (MBIE). When used correctly by lenders it helps evidence they complied with the principles and did not act oppressively.

This was updated recently with the revised code to take effect from 7 July 2022.

The following is a summary only and is not intended to be used by borrowers as a full transcript of the code, or RFL’s legal duties. You can read The Responsible Lending Code 2022 here.

Every lender must exercise the care, diligence, and skill of a responsible lender:

• when advertising
• before agreeing to provide credit or finance, or insurance, or taking guarantees, and
• in all subsequent dealings with borrowers and guarantors.

Lenders must:

• Make reasonable enquiries before entering into a loan (or taking a guarantee) to be satisfied that:
  • the credit provided will meet the borrower’s needs and objectives
  • the borrower or guarantor will be able to make the payments under the loan, or comply with the guarantee, without suffering substantial hardship. 
• Help borrowers and guarantors to make informed decisions
• Help borrowers decide whether to enter into the agreement, agree to variations or any later decisions and to be reasonably aware of the contract’s effect by making sure:
  • advertising is not likely to be misleading, deceptive or confusing to borrowers
  • the contract’s terms are expressed in plain language in a clear, concise and intelligible way
  • information is not presented in a way that is likely to be, misleading, deceptive or confusing.

• Act reasonably and ethically:
  • when breaches of the loan occur or when other problems arise
  • when a borrower suffers unforeseen hardship
  • during repossession including:
    • taking all reasonable steps to ensure goods and property are not damaged
    • adequately storing and protecting repossessed goods
    • not exercising the right to enter premises in an unreasonable manner.

• Not use oppression in dealings with borrowers:
  • to ensure contracts are not oppressive
  • their lending powers are not exercised in an oppressive manner
  • borrowers are not induced into contracts by oppressive means. 

• Comply with all of their other legal obligations to borrowers. This includes:
  • following the rules about disclosure, credit fees, unforeseen hardship applications, and credit repossession in the Credit Contracts and Consumer Finance Act
  • not making false or misleading representations or including unfair contract terms as required by the Fair Trading Act
  • carrying out their services using reasonable care and skill, as required by the Consumer Guarantees Act. 

When the insurance is arranged by the lender, they have to:

• make reasonable inquiries before an insurance contract is signed
• ensure the policy is likely to meet the borrower’s requirements and that payments will not cause substantial hardship.

The lender can rely on information the borrower provides, unless the lender has reasonable grounds to believe the information is not reliable.

• Assist borrowers to make informed decisions about buying that insurance and to be reasonably aware of the full implications of doing so. This includes making sure:
  • any advertising distributed by the lender is not likely to be, misleading, deceptive or confusing to borrowers
  • information is not presented in a misleading, deceptive or confusing manner

This includes:

• following the rules about disclosure, credit fees, unforeseen hardship applications, and credit repossession in the Credit Contracts and Consumer Finance Act
• not making false or misleading representations or include unfair contract terms, as required by the Fair Trading Act
• carrying out their services using reasonable care and skill as required by the Consumer Guarantees Act.

Lenders need to:

• Make reasonable inquiries, before guarantees are given, that guarantors can likely comply without suffering substantial hardship. The lender can rely on information the guarantor (or borrower) provides, unless the lender has reasonable grounds to believe the information is not reliable. 
• Assist guarantors to reach informed decisions about agreeing to the guarantee and to be reasonably aware of the full implications of doing so. This includes making sure:
  • any advertising distributed by the lender is not likely to be, misleading, deceptive or confusing to borrowers
  • information is not presented in a misleading, deceptive or confusing manner.
• Treat guarantors reasonably and in an ethical manner. This includes when the debtor defaults or when other problems arise. 

• Not use oppression in dealings with guarantors:
  • to ensure contracts are not oppressive
  • their lending powers are not exercised in an oppressive manner
  • guarantors are not induced into guarantees by oppressive means. 

• Meet all their legal obligations to guarantors.

If a lender doesn’t comply with any of the principles the Courts can take this into account in deciding whether or not:

• the lender has acted oppressively under Part 5 of the CCCFA
• to make any orders for refunds, compensation, exemplary damages or other orders.

It does not, however, make the credit contract or any security interest unenforceable.

Real Finance is here to help manage your financial goals and challenges whenever you have them. If things have changed since you borrowed your loan and you find you are struggling, communication is the key.

See our guidance here.

If after talking to us you are not satisfied with the outcome, you can make a complaint to our independent dispute resolution scheme. These complaint schemes are free for consumers, but should only be enlisted if and when you have exhausted contact with us.

View our complaints process & dispute resolution scheme provider.

• www.sorted.org.nz
• www.consumeraffairs.govt.nz
• www.comcom.govt.nz