Overview

The Credit Contracts and Consumer Finance Amendment Bill has passed its third reading and is now awaiting Royal Assent.

We’ve reported previously about these reforms, which are intended to simplify and streamline the regulation of financial services by aligning both the regulator and key aspects of the consumer credit regime with the Financial Markets Conduct Act 2013. With the third reading and recent tweaks to the bill (as well as updates from the regulators) we now have more clarity as to when the legislation will come into force (1 July 2026) and the timing of changes generally.

Key changes 

1. Transfer of regulatory responsibility from the Commerce Commission to FMA

Responsibility for administering the CCCFA will transfer from the Commerce Commission to the Financial Markets Authority on 1 July 2026.

2. New Market Services Licence

The existing 'fit-and-proper' certification regime administered by the Commerce Commission is being replaced with a compulsory licensing regime under the FMA.

• Certified lenders (and certain exempt entities) will automatically be deemed licensed for the service of acting as a creditor under a consumer credit contract on transition.

• No application or fee is required for this initial licensing.

The Commerce Commission has noted that changing from certification to licence, adds two criteria beyond those applicable under certification: 

1. the capability of effectively providing the service; and 

2. that the applicant is not likely to contravene applicable duties or obligations.

FMA licences are generally open-ended, though conditions may set a time frame. In a recent update, the FMA has stated that it is not planning to impose licence conditions immediately and will consult with lenders before imposing any licence conditions.

3. Repeal of the director and senior manager due diligence duty

The director and senior manager due diligence duty under section 59B of the CCCFA is to be repealed, removing a contentious governance obligation.

4. Reform of disclosure failure consequences (section 99(1A))

Section 99(1A) of the CCCFA, which concerns the consequences of a failure by a lender to provide correct disclosure, will be repealed and replaced with a more flexible, court-based remedial framework. The new mechanism:

• provides that a court may make an order with reference to the costs of borrowing (in contrast to section 99(1A), which some argue created an entitlement for an affected borrower to a refund of the costs of borrowing); and

• requires a borrower to demonstrate loss or damage before the court can make such an order.

This addresses concerns that the previous provision operated too rigidly.

5. Extension of sections 95A and 95B

The operation of sections 95A and 95B of the CCCFA (which permit a court to reduce the effect of a lender's failure to make disclosure) is being extended to apply to the period 6 June 2015 to 20 December 2019 (with exceptions for certain proceedings on foot). 

Transition arrangements

In a recent update the Commerce Commission noted that the two regulators as well as the Ministry of Business, Innovation and Employment are working together to achieve a seamless transfer. 

We understand from FMA and Commerce Commission communications that the FMA is to take over responsibility for CCCFA cases that are active at the time of the transfer. 

FMA's regulatory approach from 1 July 2026

From a recent Commerce Commission publication, we understand that the FMA will take an engagement-led, risk-based approach to supervising consumer credit lenders, with a supervisory focus that is proactive and risk-based, centred on fair conduct, targeting significant risks and opportunities, reducing unnecessary regulatory burden, and giving flexibility in how obligations are met.

The FMA has also communicated that once the transfer of credit regulation occurs, the FMA intends to use its full range of regulatory responses, including warnings, direction orders, stop orders, action plans, licence conditions, and licence suspension or cancellation. Litigation, including enforceable undertakings, civil proceedings, and criminal proceedings are also likely to be used for more serious conduct.

As stated previously, we consider the Bill to be a positive step toward a more balanced efficient regulatory regime. While the changes are well aligned with the Government’s stated objective of balancing increased flexibility for lenders with the need to maintain responsible lending standards, in our view the changes could have gone further to achieving this.

Our specialist team would be very pleased to assist if you have any questions about the CCCFA reforms or how they may affect your business. We regularly advise lenders and financial service providers on regulatory change, licensing, and compliance frameworks, and can support you in preparing for the transition to FMA oversight and in understanding how your obligations have changed as a result of the reforms.