After five months and over 1,500 submissions, the Finance and Expenditure Select Committee this week released its report on the proposed amendments to the Credit Contracts and Consumer Finance Act 2003 (the CCCFA).

The heightened interest in the proposed changes stems from the controversial proposal to retrospectively change the remedies available to borrowers who did not receive complete or accurate disclosure between June 2015 and December 2019 from a lender.

Background

The Credit Contracts and Consumer Finance Amendment Bill (CCCFA Bill) is one of a package of three bills aiming to reform the regulation of financial services in New Zealand.^[1] Read our overview of these reforms here.

The CCCFA Bill proposes to make four key amendments to the CCCFA:

1. Regulator: the regulatory responsibility for the CCCFA will pass from the Commerce Commission to the Financial Markets Authority.
2. Licensing: The current “fit and proper” certification process under the CCCFA will be replaced by a new licensing regime under the Financial Markets Conduct Act 2013.
3. Alignment: Unnecessary and duplicative aspects of the CCCFA will be repealed to facilitate a consistent and proportionate regulatory system, including the due diligence duty currently imposed on directors and senior managers under the CCCFA.
4. Disclosure remedies: Repeals the existing provisions whereby the borrower is not liable for the costs of borrowing, and instead empower the court to order redress if the borrower has been prejudiced by the non-disclosure or improper disclosure with retrospective application to all cases since June 2015.

Select Committee 

The focus of the report (and of the submitters) was only on one of these four key amendments: the controversial retrospective change proposed to disclosure remedies. This element continues to overshadow all other aspects of the reforms.

We previously described these retrospective changes as exceptional, but justified. Our view is that the amendments do not extinguish legitimate consumer rights, but rather overhaul problematic law by empowering the Court to reach a fair and equitable outcome. 

The majority of the Select Committee elected to retain the retrospective effect of the proposed changes. However, this was subject to one significant carve-out.

Potential fairness

The retrospective benefit to lenders will not extend to the defendants of the class action currently before the Court. This is particularly relevant for ANZ who continues to defend the claim.

This raises questions of potential fairness, because the current defendants will be unable to rely on the amendments to argue that the Court should only impose a fair and equitable remedy, in the event any liability were to be established, but any other lender in the same position in a similar case in future will be able to do so.

The Select Committee appears to have been persuaded by the large number of submitters who were against the retrospective change applying to the class action. It also noted it had no reason to expect proceedings against other lenders relying on the historical law at issue in the banking class action, so any unfairness may remain unrealised.

What next 

As it has the support of the Government parties, the CCCFA Bill will now go through its Second and Third Reading before being passed into law.

The timing for that process is currently unknown, but we would expect this to be progressed no later than Q1 2026.

Get in touch

Please reach out to one of our experts if you are unclear about the Bill’s implications for your business.