Secondhand Dealers & Pawnbrokers Licensing Authority

Fact Sheet No.3

18 February 2005

LEGISLATIVE CHANGES AFFECTING SECONDHAND DEALERS AND PAWNBROKERS

The Secondhand Dealers and Pawnbrokers Act 2004 was passed on 6 July 2004 and comes into force on 1 April 2005. This Act reforms the licensing and regulatory regime that exists for secondhand dealers and pawnbrokers and achieves the Government's long standing dual objectives of making it:

harder for criminals to dispose of stolen goods through secondhand dealers and pawnbrokers; and
easier for the Police to recover stolen goods and solve property crimes.

The Act creates a modern licensing scheme aimed at vetting all those involved in the industry. This will be administered by the new Secondhand Dealers and Pawnbrokers Licensing Authority supported by the Ministry of Justice.

New Zealand Police are responsible for monitoring and ensuring industry compliance with the requirements of the Act. Police believe that the Act's recordkeeping requirements coupled with its enhanced inspection and notice powers will aid in the detection of property offenders. Those same powers also have the potential to greatly assist in the recovery of victims’ stolen property. It is the New Zealand Police’s intention that these powers will be used to the fullest extent to achieve further reductions in the rate of property offending.

Ultimately, the Police will have the power to prosecute licence and certificate holders for failing to comply with the requirements imposed by the Act. However, Police would like to work co-operatively with the industry to ensure that the legislation's objectives are accomplished.

The Police and the Ministry of Justice would encourage you, as a current member of the industry, to become familiar with the Secondhand Dealers and Pawnbrokers Act 2004 and to take steps to ensure your business complies with its requirements from 1 April 2005.

The enclosed fact sheet highlights your responsibilities under the new Act. It also outlines the new licensing process as it applies to you as a current licence holder.


Rob Robinson Commissioner of Police	Belinda Clark Secretary of Justice

FACT SHEET

18 February 2005

LEGISLATIVE CHANGES AFFECTING SECONDHAND DEALERS AND PAWNBROKERS

INTRODUCTION

The new Secondhand Dealers and Pawnbrokers Act 2004 will come into force on

1 April 2005.

The stated purposes of the Act are to:

make it harder for criminals to dispose of stolen goods through secondhand dealers and pawnbrokers; and

make it easier for the Police to recover stolen goods and solve property crimes; and

repeal and replace the Secondhand Dealers Act 1963 and Pawnbrokers Act 1908.

The new law will see all secondhand dealers and pawnbrokers licensed and regulated under the one Act. It also sees the creation of a modified and modern licensing regime aimed at vetting all involved in the industry, whether they be licence holders, individuals involved with the management of companies, or employees dealing with goods covered by the Act.

The Act will place greater emphasis on identifying from whom secondhand articles, scrap metal, and pawned goods were obtained. There are increased record keeping requirements and obligations to notify Police when suspected stolen goods are offered for sale or pledge. Police will be ensuring industry compliance and have a range of tools available to them including offences carrying penalties of up to $20,000.

What will this mean to you as a current licensed Secondhand Dealer or Pawnbroker?

CURRENT LICENCE HOLDERS RESPONSIBILITIES

Transitional licences and applying for a new licence under the new Act

If you hold a current licence under either the Secondhand Dealers Act 1963 or the Pawnbrokers Act 1908 on 1 April 2005, that licence becomes a "transitional licence". Holders of "transitional licences" can trade on that licence for up to one year. However, the "transitional licence" will expire on 1 April 2006. That means that if your business falls within the ambit of the Act you will need to be re-licensed under the new Act by 1 April 2006 or you will not be able to continue trading. If you do not apply for a new licence, but continue to operate without one after 1 April 2006 you could face prosecution by the Police and face a fine of up to $20,000 by the Courts.

General obligations

If you trade under a "transitional licence" you have to comply with the other requirements of the new Act from 1 April 2005. These include the recordkeeping, labelling, and storage provisions, the obligation to notify Police of suspected stolen goods, and the new requirement (save in very specific circumstances) to verify the identity of the person from whom an article is acquired. When verifying an individual’s identity the licensee can only accept certain forms of identification. Those are set out in the Second Schedule to the Act, which is reproduced on page 8. Again, failure to comply with the Act’s obligations carries hefty fines on conviction.

Employee-related obligations

The new Act also has implications for employees of secondhand dealers and pawnbrokers. After 1 April 2005 anyone who, with the authority of a licence holder enters into a transaction on that licence holder's behalf, or manages, supervises or controls someone who does, must now hold a certificate. If you have employees who enter into transactions on your behalf or who manage staff that undertake those transactions you need to ensure that they are certified. If you do not, you could be liable to a fine of up to $10,000.

However, people engaging in transactions on behalf of a "transitional licence" holder, during the Act's first year, do not need to be certified. On the expiry of your "transitional licence" employees entering into transactions on your behalf, and managers of those staff, must be certified. We suggest that as a "transitional licence" holder you apply for certification of your employees at the same time that you apply for your licence under the new Act. (If you become licensed under the new Act, you will generally have two months after the first time you authorise an individual to enter into a transaction for you to obtain certification for that person. That two-month grace period does not apply if you believe that they may be disqualified from holding a certificate.)

As a licence holder you are obliged, even when trading under a "transitional licence", to keep employee records and to make those records available to Police for inspection.

WHO NEEDS TO BE LICENSED?

Whether you will need to be licensed under the new Act will depend on the types of activity you or your company are engaged in.

Secondhand Dealers

The Act states that "every person who engages in business as a secondhand dealer must hold a licence".

"Secondhand dealer"

A secondhand dealer is defined as:

a person who buys (for the purpose of trade), sells, exchanges, or otherwise deals in secondhand articles or scrap metal (but who is not a pawnbroker or an employee).

This definition includes individuals, partnerships, and companies.

Not all goods are "articles" for the purpose of secondhand dealing. The Act defines those items that are "articles" in the First Schedule to the new Act (see page 8). If you trade in any of those items you will be dealing in secondhand articles. (Please note that "copper in any form" is an "article" for the purpose of this Act.)

You are also covered by the definition of "secondhand dealer" if you deal with scrap metal.

"In business"

You will be presumed to be in business as a secondhand dealer if you or your company, in any 12-month period:

buys secondhand articles or scrap metal, for the purpose of trade, on six or more different days; or
sells, exchanges, or otherwise deals with secondhand articles or scrap metal (being secondhand articles or scrap metal acquired for the purpose of trade) on six or more different days or so as to receive revenue of $2,000 or more.

If you fall within the definitions of both "secondhand dealer" and "in business" you will need to be licensed under the 2004 Act, unless you are:

a licensed auctioneer, under the Auctioneers Act 1928;
a charitable or non-profit organisation (using the proceeds solely for the purpose of the organisation) and you do not purchase (or otherwise provide valuable consideration when acquiring) the articles;
an internet auction provider; or
an agent of the Crown.

(In the future others may be added to this list by regulation).

Pawnbrokers

"Every person who acts as a pawnbroker must hold a licence."

A pawnbroker is, broadly, a person (including a company or partnership) who:

in expectation of profit, gain, or reward lends money on the security of goods,

by taking those goods into their (the pawnbroker’s) possession but without taking ownership of the goods.

(A person is not a pawnbroker if they are a secondhand dealer or employee.)

If you fit this definition, you are a pawnbroker and are required to be licensed under the new Act.

THE LICENSING / CERTIFICATION PROCESS

From 1 April 2005, all applications for a licence or certificate will be made to the new Secondhand Dealers and Pawnbrokers Licensing Authority appointed under section 70 of the Act.

New Secondhand Dealers and Pawnbrokers Licensing Authority

The new Licensing Authority will operate out of Wellington. It will be supported by the Tribunals Unit of the Ministry of Justice. Ministry staff will provide the Authority with the administrative support it needs to function effectively.

The Authority’s primary function, is to determine whether to grant or refuse applications for licences and certificates made to it, under the 2004 Act. It will also decide (under the new Act) any applications made under the old Acts - that were lodged with a District Court and not determined before 1 April 2005. The Licensing Authority will also be statutorily responsible for establishing and maintaining public registers (which will be electronic and web-based) for both licence and certificate holders.

Applying for a Licence or Certificate

The application form for a licence or certificate has yet to be finalised (see "Regulations affecting the application process" below). All individual applicants (including each partner in a partnership) will be required to complete the authorised form, including (at a minimum) providing:

their full names;
their date of birth;
their contact address; and
other required contact details.

The completed form should be submitted to the Licensing Authority and must be accompanied by a statutory declaration, the prescribed fee, and two (appropriately authenticated) photographs.

In the case of a company applying for a licence the applicant must (at a minimum) provide:

the name of the company
the registered address of the company
the street address of the principal place of business (unless the applicant will be undertaking business as an itinerant secondhand dealer) and every other place of business to be used by the applicant; and
the full name and date of birth of every person involved in the management of the company.

Relevant Considerations

All applicants for a licence or certificate, whether a company, partnership or individual, will be subject to an initial criminal history check. You or your company or your employees will be automatically disqualified from being granted a licence or certificate if, at the time of the application, you:

(in respect of an individual) are under 18 years of age

have been convicted of a specified offence (under sections 217 to 265 of the Crimes Act 1961 or an offence against the Fair Trading Act 1986) within the past 5 years

have been convicted, within the past 5 years, of an offence under the 2004 Act

have been convicted of any offence under the Pawnbrokers Act 1908 or Secondhand Dealers Act 1963 within the past 5 years

have been subject to a term of imprisonment, at any time within the past 5 years

have had a certificate or licence cancelled, or had renewal of a certificate or licence refused, within the past 5 years

hold a certificate that is suspended

are, or was at the relevant time, a person concerned in the management of a company that has had a licence cancelled within the past 5 years.

The Act provides for the Authority to waive the disqualification if there are special reasons for doing so. Applicants would need to apply for a waiver in writing at the same time they are applying for a licence or certificate.

Police’s power to object

Even if an applicant is not automatically disqualified, Police can object to the application on the basis that the applicant is "not a fit and proper person" to hold a certificate or licence. If Police object to your application they will send a copy of their objection to you.

At that time you may request a hearing before the Licensing Authority. Every application for a hearing must be in writing, and reach the Authority within three weeks of the Police sending the notice of objection. You will be given at least 14 days notice of the hearing and you may appear before the Authority in person and /or through legal counsel or someone authorised to appear on your behalf. The Authority will then decide they accept or reject the Police’s objection at the conclusion of the hearing, or shortly thereafter in writing.

Alternatively, on receiving a Police objection, you may wish to make written submissions to the Authority. Any such submissions must reach the Authority within three weeks of the date on which Police sent the objection. You may also choose not to respond to the Police objection. Either way, the Authority will make a written determination on whether to accept or reject the Police’s objection to the granting of a certificate or licence to you.

The grant of a licence or certificate

The Authority must issue your certificate or licence unless:

you are automatically disqualified from holding a certificate (and no waiver has been granted);
the Authority upholds a Police objection against you; or
you failed to comply with one of the requirements for the application e.g. you did not pay the required filing fee.

Regulations affecting the application process

As indicated, some of the matters that you need to comply with as an applicant for a licence or certificate will be prescribed by regulation. The Regulations will be passed prior to the Act coming into force. They will prescribe, amongst other things:

the application fees for licences and certificates
the form for applications including what specific information is to be supplied on that form; and
how the required photographs are to be properly authenticated.

Any queries about the application process should be addressed to the Ministry of Justice.

Cancellation of a Licence

In the case of a licence held by an individual, if the licence holder ceases to be eligible to hold a certificate or when the licence holder is a company and any person involved in its management is not eligible or ceases to be eligible to hold a certificate or in either case the Licensing Authority is satisfied that the licence was issued by fraud or mistake, it must cancel the licence.

Cancellation and Suspension of Certificates

The Authority has the power to cancel or suspend a certificate if the Authority:

has received and upheld a complaint from Police about the certificate holder;
is satisfied that the certificate holder has become disqualified and has not sought a waiver or has had a waiver application refused; or
is satisfied that the certificate was obtained by fraud or mistake.

If the Authority suspends a certificate, the suspension will be for a maximum of three months, at which time the Authority must make a determination to either lift the suspension or cancel the certificate permanently.

Expiry and Renewal of Licences and Certificates

New licences and certificates issued under the Secondhand Dealers and Pawnbrokers Act 2004 only last for five years from the date of issue. Licences and certificates will expire at that point (unless an application to renew has been made). They will also expire on cancellation or on their return to the Authority by the licence or certificate holder, if they are no longer trading for whatever reason.

An application can be made to renew a certificate or licence. If made within the five-year period, that licence or certificate will continue in force until the Authority makes a determination as to its renewal. The Registrar of the Licensing Authority will write to all holders prior to the expiry of their licence or certificate, to remind them of the need to seek a renewal.

COMPLIANCE AND ENFORCEMENT

In addition to their role in the licensing and certification processes, Police are responsible for ensuring that operators comply with the requirements of the 2004 Act.

To enable Police to effectively monitor licence and certificate holder compliance with the requirements of the Act, Police have a number of powers of inspection and the ability to impose additional requirements on members of the industry where they suspect stolen goods are or may come into that operator’s possession.

Powers of Inspection

Police may inspect and copy:

employee records
dealers records; and

pawnbrokers records.

Police can also inspect goods acquired by a licence holder.

Notices re stolen goods

If Police give a notice under section 39 to a licence holder specifying goods that are (or are alleged to be) stolen, the licence holder must:

notify Police if they are offered those goods for sale or pawn; and
check whether the specified goods are already in the licence holder’s possession.

If you received such a notice and find such goods in your possession, you must report that fact to Police as soon as practicable. You are also obliged to hold the goods for 14 days from the time you reported it to Police.

Where Police suspect (on reasonable grounds) that any goods held by the licence holder are stolen goods Police may, under section 40, issue a notice to hold those goods. If issued with such a hold-notice you must not dispose of the goods for 28 days from the date of notice, unless subsequently authorised to do so by Police.

WANT TO KNOW MORE?

To read more about the new Act, you can access it on the Internet by visiting the following site: http://www.legislation.govt.nz/ and then use this site’s search function.

If you have any questions at this time, please do not hesitate to contact those people listed for this purpose, as follows:

CONTACT DETAILS

FOR INQUIRIES RELATING TO POLICE RESPONSIBILITIES UNDER THE NEW ACT:

Project Manager

Public Awareness Campaign

Secondhand Dealers and Pawnbrokers Act Implementation

Public Affairs

Office of the Commissioner New Zealand Police

PO Box 3017

WELLINGTON

Email: info4traders@police.govt.nz

Phone: 0508 info4traders or 0508 463648

Website: www.info4traders.govt.nz

ALTERNATIVE SOURCES OF INFORMATION:

The New Zealand Licensed Traders Association Inc represents a number of licensed traders and is also a source of information and advice to all involved in the trade. Rex Henry, the Association’s Executive Officer, can be contacted as follows:

Email: inquiry@traders.org.nz

Phone: (09) 838-5420

Fax: (09) 296-6784

Website: www.traders.org.nz

The Scrap Metal Recycling Association of New Zealand Incorporated is the national scrap metal industry association. The Association's contact details are:

Phone: (03) 344 3006

Postal Address: PO Box 16678
Hornby
Christchurch

Website: www.yellow.co.nz/site/scrapmetalrecycling/index.html

The purpose of this fact sheet is to explain in general terms what the relevant provisions of the Secondhand Dealers and Pawnbrokers Act 2004 are, and how they might affect you, as a licensee. It is not intended to be a detailed legal analysis. If you require more specific information, you should read the Act itself or seek legal advice.

Schedule 1

Articles for Purposes of this Act

The following are articles for the purposes of this Act:

bicycles and bicycle spare parts and accessories
boats, boat engines and boat accessories
cameras and photography equipment
coins, medals, medallions, and military decorations (but not including coins used as legal tender in New Zealand)
compact discs (laser read)
computer hardware, software, and other computer-related items
copper in any form
farm bikes and quad bikes
fishing equipment and diving equipment (including wetsuits)
electric or electronic consumer goods (including whiteware)
games machines and associated games equipment
items made substantially of, gold, silver, platinum, brass, bronze, or any combination of these metals
jackets and coats
jewellery
leather clothing (but not including footwear)
motor mowers
motor vehicle (including motor cycle) accessories and parts
musical instruments other than pianos, and all accessories of musical instruments
optical instruments such as binoculars, microscopes, and telescopes
ornamental china and crystal
portable power tools
sporting equipment
sunglasses
tool sets
watches and clocks

Schedule 2

Forms of Authorised Identification

The forms of identification that are authorised identification for the purposes of this Act are-

a current passport
a current New Zealand driver licence or a current overseas driver licence that contains a photograph
any current document containing a photograph that is issued for purposes of identification by the New Zealand Government
any document referred to in paragraph (a), paragraph (b), or paragraph (c) that has expired, but only if it expired less than 2 years before the date on which it is being used as identification:
an 18+ card issued by the Hospitality Association of New Zealand
a current document issued by a New Zealand secondary or composite school to a student that-

is issued for the purpose of identifying the student; and

contains a photograph of the student.