Law change brings consistency to loan disclosure rules
The New Zealand Banking Association (NZBA) has welcomed the government’s move to fix an inconsistency in the Credit Contracts and Consumer Finance Act (CCCFA), ensuring disclosure errors are treated consistently whether they occurred before or after 2019.
The Finance and Expenditure Committee’s recommendation – accepted by the government – clarifies that lenders who make technical mistakes in borrower disclosures will now face fairer treatment under the law.
The change forms part of the wider Credit Contracts and Consumer Finance Amendment Bill, one of three financial services reform bills currently before Parliament. The bill aims to simplify regulation, reduce compliance costs for lenders, and streamline oversight by transferring CCCFA enforcement from the Commerce Commission to the Financial Markets Authority (FMA).
NZBA chief executive Roger Beaumont (pictured) said the decision was both necessary and overdue.
“The government saw that the law was inconsistent and unfair, and they’ve mostly fixed it. We welcome that decision,” Beaumont said in a media release.
Court case exclusion ‘disappointing,’ says NZBA
While welcoming the change, Beaumont criticised the exclusion of ongoing court cases from the amendment.
“We are disappointed that the government has decided to exclude the ongoing court cases,” he said. “The principle of a just and equitable approach should be confirmed to apply to all. Government officials recommended that existing cases be included in the law change, and the government previously accepted that advice.”
Beaumont noted that between 2015 and 2019, lenders faced “draconian” penalties for even minor disclosure mistakes.
“Any lender who made even a small mistake in the information provided to borrowers, like getting their middle name wrong, could be subject to a draconian provision in the law that, on one interpretation, would make them repay all the interest and fees paid until the error was corrected,” he said. “That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer.”
What the change means for mortgage and consumer lenders
The CCCFA amendment confirms that courts should apply a “just and equitable” approach when assessing disclosure breaches – a move seen as beneficial for both large and small lenders.
“It’s important to note that this law change will not stop consumers or regulators taking action against lenders for information disclosure breaches,” Beaumont said. “It merely confirms that the courts should apply a ‘just and equitable’ approach. It would be up to the courts, as it should be.”
NZBA said the decision will help smaller banks, credit unions, and building societies that have been subject to disproportionate penalties for minor technical errors.
“This change benefits all New Zealand lenders,” Beaumont said. “Alongside lenders of all sizes, we have been advocating to correct this anomaly in the law since it was introduced 10 years ago.”
Broader regulatory reform for the finance sector
The Amendment Bill is part of a broader government effort to align financial regulation under FMA and modernise consumer protection laws.
It sits alongside proposed updates to the Financial Markets Conduct Act and Financial Service Providers Act, creating a more consistent and proportionate compliance framework across credit and financial markets.
For mortgage advisers, the reform signals greater regulatory certainty, with clearer disclosure standards and reduced risk exposure for lenders – changes likely to influence credit policies and lending documentation across the industry.
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