The Credit Contracts and Consumer Finance Amendment Bill expands the Financial Markets Authority’s role across consumer credit, consumer leases, buy‑back transactions and related services. It gives the FMA powers to declare whether particular arrangements are (or are not) credit contracts, to grant targeted exemptions, and to issue stop orders and direction orders that can prohibit supply or communication and require corrective steps.
The bill also creates new court remedies (including orders excusing debtors from specified costs from the date of breach until disclosure), tightens disclosure and cancellation rules (notably separate cancellation rights for repayment waivers and extended warranties), and aligns the Financial Markets Conduct Act and related statutes so creditors and mobile traders sit inside the FMC regulatory framework. For lenders, brokers, mobile traders and compliance teams this is a material change to regulatory risk, product design, marketing and dispute exposure.
At a Glance
What It Does
The bill authorises the FMA to make stop orders (including interim stop orders), direction orders and interim orders that can prohibit supplying services or distributing specified communications, and to impose criminal and pecuniary consequences for non‑compliance. It gives the FMA statutory powers to declare classes or particular arrangements as consumer credit contracts (or not) and to grant time‑limited exemptions, with those declarations and exemptions published as secondary legislation.
Who It Affects
Creditors, lessors, transferees and buy‑back promoters; paid advisers, brokers, debt collectors, repossession agents, and mobile traders; financial advice and market services licensees whose activities intersect with consumer credit; and legal/compliance teams responsible for disclosure, advertising and contracts.
Why It Matters
The FMA gains quick‑reaction tools to halt misleading marketing and risky products and to reclassify whole classes of arrangements, shifting the locus of consumer‑credit enforcement into the financial markets regime. That increases the regulator’s ability to protect borrowers but also concentrates rule‑making and interim enforcement in an agency rather than Parliament, with consequences for predictability, product innovation and compliance burdens.
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What This Bill Actually Does
At its core the bill retools the Credit Contracts and Consumer Finance Act to bring many consumer‑credit activities under the FMA’s direct enforcement umbrella and to connect those activities to the Financial Markets Conduct Act. The FMA can now make stop orders that bar the supply of named services or the distribution of specified communications, and it can issue direction orders that require specified remedial steps, disclosures, or corrective statements.
Those orders can be interim, and the interim stop orders are framed to operate immediately while the FMA completes its assessment.
The bill gives the FMA a new declaration power: it may declare particular arrangements or whole classes to be (or not to be) credit contracts, or to be high‑cost or related contracts for the purposes of existing subparts. Declarations and exemptions are secondary legislation and must be published with the FMA’s reasons; the statute sets out procedural requirements (consultation and economic‑substance analysis) but also permits interim orders and recognizes that a failure to consult does not, by itself, invalidate a declaration.On remedies, the bill strengthens civil tools.
Courts can make targeted orders that excuse debtors, lessees or occupiers from liability for costs of borrowing, lease or buy‑back transactions for the period beginning on the date of a statutory disclosure breach and ending when proper disclosure is made. The bill also creates a declaration‑of‑breach mechanism so the FMA (or another applicant) can secure a conclusive judicial finding of a breach to streamline subsequent remedies under other subparts.Operationally, the bill tweaks disclosure rules (for example allowing web‑based ongoing balance access to satisfy certain continuing‑disclosure obligations), creates a standalone right to cancel repayment waivers and extended warranties within five working days, and tightens the definition and treatment of guarantors who are trustees or partners.
It also folds creditors and mobile traders into the FMC licensing and territorial scope provisions, meaning that market‑services licensing and related rules will now apply more broadly to consumer‑credit service providers.Finally, the enforcement architecture includes criminal and pecuniary consequences: refusal to comply with an FMA order can attract a fine (up to $300,000), pecuniary penalties under the Act will be assessed against a broad list of factors and courts must order that any pecuniary penalty be applied first to reimburse the FMA’s actual costs of proceedings.
The Five Things You Need to Know
The debtor may cancel a repayment waiver or extended warranty separately from the underlying consumer credit contract by written notice within five working days of disclosure (or at any time if disclosure was not made).
The FMA’s interim stop orders come into force immediately and may run for 15 working days, extendable to no more than 30 working days while the FMA completes its consideration.
A person who refuses or fails, without reasonable excuse, to comply with an FMA stop or interim order commits an offence liable on conviction to a fine not exceeding $300,000.
If the court finds a creditor, lessor or transferee breached specified disclosure provisions, it may order that debtors, lessees or occupiers are not liable for costs of borrowing, lease, or buy‑back transactions for the period starting on the date of the breach until proper disclosure is made.
The FMA may make declarations or grant exemptions that reclassify entire classes of arrangements (as credit contracts, not credit contracts, high‑cost or related contracts); those declarations/exemptions are secondary legislation and must be published with the FMA’s reasons.
Section-by-Section Breakdown
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FMA stop and direction orders for consumer‑credit services
This subpart defines a ‘relevant CCCFA service’ and gives the FMA power to issue stop orders (to prohibit supply or distribution of particular services or communications) and direction orders (to require corrective steps, disclosures or prohibitions on particular statements). Interim stop orders are available immediately and run for 15 working days by default; the FMA can extend to 30 working days if it needs more time. The subpart also sets out process‑of‑law cross‑references, criminal penalties for refusal to comply, and limits appeals to questions of law in the High Court.
FMA declaration and exemption powers (secondary legislation)
The bill lets the FMA declare that specific arrangements or classes are or are not credit contracts, to designate classes as consumer credit contracts or high‑cost/related contracts, and to grant exemptions from the Act on terms and conditions. Declarations and exemptions are to be published with reasons and can be subject to conditions and transitional terms. The statute prescribes procedural requirements (economic‑substance analysis and consultation), but it also permits interim orders while the FMA considers a declaration and provides that a failure to consult does not invalidate a declaration.
Court orders that remove liability for specified costs
These sections let a court, in proceedings under the Act, order that debtors, lessees or occupiers are not liable for some or all costs of borrowing, lease, or buy‑back transactions for a specified period tied to the date of a disclosure breach and the date correct disclosure is made. The court must consider incentives for compliance, the respondent’s compliance programme and prejudice to affected persons before making such orders. The provision excludes pass‑through fees to unrelated third parties unless they are associated persons.
Right to cancel repayment waiver or extended warranty separately
The bill creates an explicit five‑working‑day cooling‑off right for debtors to cancel repayment waivers or extended warranties independently of the credit contract, unless the creditor’s requirement to obtain the waiver/warranty is reasonable. If cancelled, the waiver or warranty ceases and the debtor is entitled to repayment of amounts that are not reasonable expenses incurred by the creditor.
Creditors and mobile traders become market‑services subjects
The bill amends the FMC Act to treat acting as a creditor under a consumer credit contract and acting as a mobile trader as market services for licensing, territorial scope and regulatory obligations. That pulls many consumer‑credit activities into the licensing and conduct rules that apply to financial market services and creates exemption mechanics and licensing carve‑outs specific to creditors and mobile traders.
Pecuniary penalties and cost recovery
Courts must now consider an expanded list of factors when fixing pecuniary penalties (including exemplary damages, gains made, and the relationship of the parties), and are required to order that any pecuniary penalty be applied first to reimburse the FMA’s actual costs in bringing the proceedings. The list of provisions attracting pecuniary penalties is updated to include failure to comply with FMA stop or direction orders.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Debtors and lessees — gain faster tools to halt misleading offers, a clear five‑working‑day right to cancel repayment waivers/extended warranties, and potential court relief excusing liability for costs when disclosure breaches occur.
- Competitors and consumer advocates — get quicker relief from misleading or unsafe market conduct through stop orders that can halt distribution and supply while the FMA investigates.
- FMA and enforcement teams — obtain a flexible, fast toolkit (interim orders, declarations, exemptions and direction orders) to address novel credit products and marketing without waiting for slower rule‑making.
- Courts handling consumer credit disputes — obtain clearer statutory remedies (targeted cost relief and declarations of breach) that can be tailored to restore fairness in individual cases.
Who Bears the Cost
- Creditors, lessors, transferees and buy‑back promoters — face higher compliance costs, new exposure to immediate interim orders that can halt business and marketing, and the risk of large fines or pecuniary penalties.
- Brokers, paid advisers and mobile traders — may need licensing or fall within market‑services obligations and therefore must adapt systems, disclosure and advertising to the FMC regime.
- New‑entrant fintechs and product innovators — face regulatory uncertainty because the FMA can reclassify arrangements as credit contracts (or not) and impose interim restrictions that affect market access.
- FMA and judicial resources — enforcement speed implies higher demand on the FMA’s investigative capacity and potentially more High Court litigation on points of law and appeals from FMA orders.
Key Issues
The Core Tension
The central dilemma is balancing rapid, flexible enforcement to protect borrowers (through interim stop orders, declarations and targeted court remedies) against legal certainty and market‑innovation: concentrating classification and interim prohibition powers in the regulator helps consumers fast but increases legal and commercial uncertainty for providers and may deter legitimate new credit products.
The bill delegates substantial rule‑defining authority to the FMA: declarations and exemptions operate as secondary legislation and can reclassify entire classes of commercial arrangements. That delegation speeds regulatory responses but reduces the predictability parties get from primary legislation and means businesses must watch regulator publications closely.
Although the statute builds in consultation and requires the FMA to publish reasons, it also expressly allows interim action and provides that some procedural failures (for example, inability to consult fully) do not, on their own, invalidate a declaration or interim order.
Interim stop orders can be made and operate without prior submissions, and they take effect immediately for up to 15 working days (extendable to 30). That design prioritises quick consumer protection but creates a short window where providers must respond to binding prohibitions with limited procedural recourse.
The bill also broadens reach extraterritorially for restricted communications distributed from New Zealand, which could chill cross‑border marketing. Finally, several transitional provisions referenced in the bill suggest retrospective consequences for some existing agreements; readers should examine the transitional schedule closely because retrospective application raises practical and fairness questions for contracts entered years earlier.
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