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The Credit Contracts and Consumer Finance Act 2003 (CCCF Act) helps to protect consumers when they borrow money in New Zealand. This is its primary purpose. Its objectives include facilitating fair and transparent markets for credit and promoting the confident and informed participation of consumers in these markets. To achieve these purposes, among other rules, the Act provides rules about interest charges, credit fees, default fees, and payments in relation to consumer credit contracts.

The Act prohibits lenders from charging unreasonable credit and default fees and provides remedies for consumers who enter into oppressive contracts.

Changes were made to credit laws in 2015 to strengthen consumer protection and increase penalties for breaking the law. The changes introduced Lender Responsibility Principles that require lenders to exercise the care, diligence and skill of a responsible lender. The changes also introduced requirements that lenders publish their standard form contract terms and their costs of borrowing. This information assists consumers to understand and compare their obligations and the potential costs of borrowing money between credit products.

As part of our credit work, we have undertaken this review to better understand the potential scale of lender non-compliance with the requirement to publish standard form contract terms and costs of borrowing, and to better understand representations that lenders make about borrowers’ rights to cancel their loans. We also sought to gather information about interest and fees displayed by a number of lenders to contribute to more informed prioritisation of the Commission’s credit portfolio. We will use the information and analysis along with other relevant information to help identify lenders who may not be complying with the fee provisions or making false or misleading representations about consumer rights under the Fair Trading Act.

The research was carried out between May and December 2017 and results have been analysed by the Commission. While the research was carried out for internal purposes, we thought our findings may be of wider interest. This report summarises our findings and is intended as a general review of a range of lenders’ websites in New Zealand at a point in time.

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