Review of consumer credit law 2018

The Government has decided to make law changes to the Credit Contracts and Consumer Finance Act following our 2018 review of the consumer credit law.

Reform Bill in Parliament

Legislation to amend the Credit Contracts and Consumer Finance Act 2003 (CCCFA) was introduced into Parliament on 9 April 2019. You can read the Credit Contracts Legislation Amendment Bill(external link) online and follow its progress and consideration by select committee on Parliament’s website(external link).

We will continue working with lenders, debt collection agencies and consumer advocates to:

  • finalise the details of the new requirements around affordability and suitability assessments, advertising standards and debt collection disclosure, which will be in regulations
  • once the Bill is passed, create additional guidance in the Responsible Lending Code(external link).

Making borrowing safer

When we reviewed the law about borrowing and lending, we heard that some New Zealanders were facing problems. We asked for feedback on ways to fix them.

We received 86 submissions and heard from consumers at a number of events.

After considering these responses, the Government decided to make the following law changes. 

Law changes

A cost of credit cap on high-cost loans, to stop debt spirals:

  • Interest and fees on high-cost loans will be limited to 100% of the amount borrowed (the loan principal). For example, if an individual borrows $500, they will never have to pay the lender back more than $1000, including all fees and interest.

Clearer responsible lending requirements, to increase compliance:

  • Prescriptive requirements for affordability and suitability tests, to make it simple for lenders to comply.  This will also make it easier to complain and follow up where affordability is not properly checked.
  • New rules about disclosure and advertising. If a lender advertises in a language, they will also have to provide the loan disclosure documents in that language. Also, key elements of the current Responsible Lending Code guidelines for advertising will be made binding.

Tougher penalties for breaking the law:

  • Tougher penalties for irresponsible lending, including increased financial penalties, statutory damages, and banning orders.
  • ‘Fit and proper person’ test, to lift professionalism in the industry. Directors and executives of consumer credit lenders will be required to meet a ‘fit and proper person’ test before the creditor can be registered on the Financial Service Providers Register.
  • Duties on directors and top executives to ensure that lenders comply with their obligations.

More accountability for mobile traders:

  • Mobile traders will need to pass a fit and proper person test, and register on the Financial Service Providers Register. ‘Do not knock’ stickers will be legally enforceable. This will lift professionalism in the sector and give consumers more power to refuse to engage with mobile traders.

Easier enforcement to ensure fees are reasonable:

  • Lenders will be required to prove (substantiate) that their fees are reasonable, if the Commerce Commission asks them to do so.

Greater transparency and access to redress during debt collection:

  • Key loan information will need to be shared with debtors at the start of debt collection activity.

More information about the changes

You can find more detailed information about these changes in:

Cabinet paper Review of Consumer Credit regulation [PDF, 755 KB]

Impact Statement - Consumer Credit Regulation Review [PDF, 1.1 MB]

Cabinet paper – Credit Contracts and Consumer Finance Amendment Bill: Approval for introduction [PDF, 543 KB]

Cabinet Legislation Committee Minute of Decision: Credit Contracts and Consumer Finance Amendment Bill - Approval for introduction [PDF, 365 KB]

You can find out more about the consultation which led to these changes below. 

Research on lender's advertising and disclosure practices

The desk-based study of lenders for 2017/2018 provides comparative analysis on the lender landscape and common advertising and disclosure practices from before the 2015 reforms came into force, and 2 years afterwards.

The desk-based study of lenders [PDF, 585 KB] 

It provides data to support policy analysis around questions like:

  • How clear and responsible is lender advertising?
  • What are lenders’ fees and interest rates, as disclosed on their websites?
  • What kinds of content and themes are present in lender advertising?
  • What is the number (and turnover) of lenders since 2015?
  • What proportion of lenders are complying with registration and disputes resolution registration requirements?

Background to the review 

In December 2017, the Minister of Commerce and Consumer Affairs requested that we conduct a review of the 2015 amendments to the CCCFA.

The review's purpose was to assess progress to date of the 2015 reforms, in particular whether there was:

  • better informed decision-making for consumers
  • reduced predatory and irresponsible lending
  • increased lender compliance with legal requirements.

The table below lists the reforms that came into force in 2015. While there have been some positive results from these reforms, it was clear after our review that serious issues remained. We asked for feedback on the issues, and on ways to address them.

Consultation documents

Two page overview of discussion paper [PDF, 398 KB]

Discussion paper: Review of consumer credit regulation [PDF, 542 KB]

Background paper: additional information to support the discussion paper [PDF, 938 KB]

View the submissions we received from the consultation

2015 reforms

Thematic area


Responsible lending

  • Advertising, and requirement to publish costs of borrowing
  • Obligations to:
    • ensure borrower can repay loan without substantial hardship
    • ensure credit will meet borrower requirements
    • assist with informed decisions
    • treat borrowers, guarantors and their property reasonably and ethically
    • Responsible lending requirements, including around oppression

Penalties and enforcement

  • New, increased penalties
  • Strengthened incentives to register on the Financial Service Providers Register


  • New repossession requirements

Other lender obligations

  • Improved disclosure requirements
  • Extended cooling-off period
  • Minimum repayment warnings on credit card statements
  • Further unforeseen hardship obligations