Focus on engagement, not enforcement, as FMA takes on consumer finance responsibilities

The Financial Markets Authority (FMA) is taking over responsibility for the regulation of the controversial Credit Contracts and Consumer Finance Act (CCCFA) with a view to making it work better for consumers and lenders.

The transfer of responsibility from the Commerce Commission to FMA will take place from 1 July, including the transfer of experienced CCCFA staff from the commission.

FMA executive director Clare Bolingford said the FMA would use its full range of regulatory and enforcement powers to deal with misconduct, though the focus was on engagement with industry.

“As an engagement-led regulator, we’ll work closely with lenders and industry stakeholders to ensure the financial services sector delivers fair outcomes and earns the trust of businesses, consumers, and investors,” she said.

“This isn’t just a change in oversight - it’s a move toward a more connected and coordinated approach to regulating financial market conduct. By aligning credit regulation with broader financial services, we’re creating a framework that better supports responsible lending and consumer protection.”

Among the measures were changes to licensing of non-bank lenders, who currently account for about 90 percent of a total estimate of 500 lenders.

Existing non-bank lenders would automatically be licenced by the FMA, though new lenders would need to apply for a licence.

“Introducing a licensing regime for lenders will give the FMA more ways to monitor and supervise lending activity, and will provide a wider set of regulatory tools to support effective oversight,” Bolingford said.

“It provides us with the opportunity to be that full service conduct regulator and financial services for all New Zealanders.

“We’re very excited about the opportunity to really make a difference in this sector for customers and to really ensure that the industry is being regulated in a proportionate way and in a way where that they can deliver great services for New Zealanders as well.”

Among the measures were the FMA’s ability to issue stop-orders, which had immediate effect.

“These are things that the Commerce Commission didn’t have before, which enables us to be quicker at responding where we do see misconduct rather than necessarily taking everything through litigation, which can be quite a long and drawn-out process to actually get remediation for customers when something’s gone wrong.”

She said the FMA had been working with the commission over the past couple of years in preparation for the transition of regulatory responsibilities.

“As we approach 1 July, the FMA and Commerce Commission continue to work together to ensure a seamless transition.

“We’ve also put in place robust governance and security protocols to manage the transfer of information from the Commerce Commission, ensuring that data integrity and privacy are protected every step of the way.”

Background

The CCCFA is a controversial piece of legislation which has been reviewed and amended several times since it was first introduced in the mid-70s.

A tightening up of disclosure rules in 2021 led to unintended consequences, with mainstream lenders becoming far more cautious and denying loans to people and businesses with previously good credit records.

Those concerns resulted in further amendments to the CCCFA in 2024, which gave banks more flexibility and discretion in making loans.

The latest Credit Contracts and Consumer Finance Amendment Bill transfers the regulatory responsibility for the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to the FMA.

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