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Lenders must repay all fees and interest if they don’t comply with disclosure rules

4 May 2016

The Commerce Commission is reminding lenders that failing to disclose key information to borrowers in their consumer credit contracts could result in the repayment of all fees and interest on each loan for the period until disclosure is corrected.

Changes made to New Zealand’s credit laws (Credit Contracts and Consumer Finance Act 2003 (CCCFA)) in June last year mean lenders must disclose specific key information to borrowers, including the term of the loan, total amount, interest, fees, any security taken and the effect of that security, and the borrower’s right to apply for relief on grounds of unforeseen hardship. The Commission has been active in enforcing the law changes and currently has a number of investigations underway involving lenders that have not complied with their disclosure obligations.

Commissioner Anna Rawlings says the consequences for lenders of failing to disclose key information to borrowers are significant. “If that key information is not adequately disclosed, lenders are unable to enforce any interest or credit fees during the period of non-compliance. For some lenders this could run into the millions of dollars.”

Last month payday lender Cash in a Flash returned more than $120,000 to customers after being warned by the Commission that it was likely to have breached consumer credit laws.

“The law applies to lenders of all sizes and types, from small payday lenders through to our major banks. The responsibility to ensure contracts comply with the law rests squarely with those lenders and it is essential that they ensure their disclosure documents have been reviewed and they are satisfied that the documents contain all of the relevant key information required by the CCCFA,” said Ms Rawlings.

“If a lender finds their documents don’t contain all the key information they should seek legal advice immediately. We would recommend that they update the documents and disclose the missing information to all their current debtors as soon as possible.”

“Lenders had 12 months prior to the law changing to get up to speed with the changes and to ensure that their documents and processes complied with the law. Detailed information on the changes has been available to lenders and the Commission ran a number of workshops to help lenders to understand what is required of them. There is no excuse for non-compliance and the Commission will take enforcement action against those who do not comply.”

In addition to refunding the interest and fees, lenders who don’t comply with the rules could face a range of potential criminal enforcement action and fines with a maximum fine for complete non-disclosure of up to $600,000.


Changes to New Zealand’s consumer credit law took effect on 6 June 2015 and apply to contracts entered into after that date. The key changes include:

  • lender responsibility principles, supported by guidance set out in the Responsible Lending Code
  • new rules about the repossession of consumer goods
  • amendments to some of the rules about disclosure
  • higher penalties for breaking the law
  • broader range of enforcement tools for the Commission.

A range of other measures to strengthen consumer protection have also been introduced. More details about the changes can be found in our fact sheet.

Specific information on disclosure can be found in our Disclosure Guidelines.

Model disclosure forms for lenders are available here.

Penalties under the CCCFA for breaching disclosure rules include infringement notices, a fee of $1,000 per breach or prosecution and a fine of up to $30,000. Complete failure to provide disclosure can lead to prosecution and a fine of up to $600,000. Penalties for failing to meet the disclosure standards in the CCCFA (including by providing misleading or deceptive information) include prosecution and a fine of up to $600,000.