The New Zealand Banking Association has welcomed the Government’s decision to accept the Finance and Expenditure Committee’s recommendation to resolve a long-standing anomaly in the Credit Contracts and Consumer Finance Act.
The change will confirm that disclosure errors are treated the same whether they occurred before or after 2019, addressing what the sector has described as an inconsistent and unfair provision.
NZBA chief executive Roger Beaumont said the Government had acted to correct an issue that created disproportionate consequences for lenders.
“The government saw that the law was inconsistent and unfair, and they’ve mostly fixed it. We welcome that decision,” he said.
However, Beaumont noted the industry was disappointed that the updated law will exclude ongoing court cases. “The principle of a just and equitable approach should be confirmed to apply to all. Government officials recommended that existing cases be included in the law change, and the government previously accepted that advice.”
Under the previous interpretation of the CCCFA, lenders who made even minor disclosure mistakes between 2015 and 2019 – such as an incorrect middle name – could be required to refund all interest and fees paid until the error was corrected. Beaumont said such outcomes were “totally out of proportion” with the nature of the breach, particularly where there was no harm to the borrower.
He emphasised that the amendment would not prevent consumers or regulators from taking action over disclosure failures.
“It merely confirms that the courts should apply a ‘just and equitable’ approach. It would be up to the courts, as it should be.”
Beaumont said the change would benefit lenders of all sizes, including smaller banks, credit unions and building societies, and reflects a decade-long effort across the sector to correct the anomaly.
He said the NZBA and its members had been advocating for the fix since the provision was first introduced, describing the change as an important step toward restoring proportionality and consistency in the law.