The Credit Contracts and Consumer Finance Amendment Bill currently before Parliament includes unprecedented retrospective provisions that directly impact ongoing litigation. While the timing is unfortunate, we believe these changes are commercially necessary to address what amounts to bad law.

What's happening

The Bill proposes significant changes to remedy provisions under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), including retrospective application to lending between 2015-2019. Most controversially, the amendments explicitly target the high-profile class action against ASB and ANZ (Simons & Ors v ANZ Bank New Zealand Limited and ASB Bank Limited).

The current problem

Section 99(1A) of the CCCFA requires complete forfeiture of borrowing costs for any disclosure breach, regardless of whether borrowers suffered actual loss. This "all or nothing" approach can result in penalties grossly disproportionate to minor technical breaches.

The proposed solution

The Bill introduces a "just and equitable" test, allowing courts to reduce or extinguish awards based on factors including the extent of breaches, actual prejudice suffered, and prior compensation paid.

Why it matters for business

The Reserve Bank estimates that potential litigation under the current s 99(1A) regime could impact the financial system by up to $12.9 billion. Such exposure could threaten lender solvency and undermine the broader credit market.

The amendments don't extinguish legitimate consumer rights. They replace an overly punitive system with proportionate remedies that still allow compensation where actual loss occurs.

The constitutional controversy

Legal academics and the Law Society have raised serious concerns about Parliament intervening in live litigation between private parties. Critics argue that it:

• undermines rule of law principles; 
• creates dangerous precedent for future government interference; and 
• may deter litigation funders from operating in New Zealand.

However, supporters argue the public interest in financial system stability justifies the retrospective intervention, particularly given the "windfall" nature of many potential claims under the current regime.

What this means for lenders and borrowers

For lenders: The changes provide protection against disproportionate penalties while maintaining appropriate consumer protections where actual harm occurs.

For borrowers: Legitimate compensation claims remain available, but "windfall" recoveries based on technical breaches without loss will be curtailed.

For the market: The amendments should help maintain stable credit supply and competitive lending conditions.

Looking ahead

As a Government-sponsored bill, we expect these changes to pass into law later this year, with the Select Committee report due 20 October 2025.

While the retrospective nature of these amendments is exceptional, the underlying policy problem they address, which is potential systemic risk from disproportionate penalties, represents an exceptional circumstance that justifies Parliamentary intervention.

If you would like to discuss anything in this article, please get in touch with one of our experts.

Special thanks to Georgia Hughey for her assistance in writing this article.