What is the CCCFA and how does it affect you?

3 min read
18 January, 2022

You might have read about the acronym CCCFA in the news over the past week, and how it's impacting Kiwis, particularly those looking to purchase a home.

What is this legislation and what does it mean? Might you be affected by it? We look at exactly what it aims to do and how it could impact you.

What is the Credit Contracts and Consumer Finance Act (CCCFA)?

The Credit Contracts and Consumer Finance Act (CCCFA) 2003 is a piece of legislation that aims to protect you as a consumer of certain financial products and services (credit contracts, leases and buy-back transactions of land) by requiring lenders to act responsibly. 

When you borrow money from a bank or financial services provider (i.e. a 'lender') to take out a mortgage, personal loan or use a credit card, CCCFA requires lenders to provide you with information so you can make an informed decision, to help you to understand what you're signing up for and can keep track of how much debt you owe.

The CCCFA sets out things such as: 

  • how interest is calculated (along with how much lenders can charge you in interest);
  • the information that lenders must share with you before you sign an agreement with them that will enable you to compare costs with other lenders and shop around;
  • other rights in relation to prepayments, repossessions, hardship applications, cancellations and more. 

For a full breakdown of what is and isn't covered by the CCCFA, visit the Consumer Protection Government website.

What's changed recently?

The original Act was passed in 2003, but it's recently been changed by the Credit Contracts Legislation Amendment Act (CCLAA) 2019. Most of the final changes came into effect on 1 December 2021 but one final change will come into effect on 1 February 2022.

These changes were designed to protect New Zealand borrowers from committing to taking out loans that may be unsuitable or unaffordable by outlining additional responsibilities for lenders to abide by. 

Some of these changes mean that lenders now have to: 

  • meet minimum advertising standards relating to the affordability and suitability of their loans; 
  • take reasonable steps to provide information about their loans to New Zealand borrowers in the same language they advertise in;
  • disclose prescribed information about disputes resolution and financial mentoring services in print and internet advertising (applies to high-cost consumer credit contracts only);
  • taking reasonable steps to provide information about the loan to borrowers; 
  • include a prominent statement in their advertising of high-cost credit contracts that they should not be used for long-term or regular borrowing, and are only suitable for temporary, short-term cash needs;
  • check whether any material changes to a consumer credit contract affect the borrower before making them. 

For a full list of the recent changes, visit the Commerce Commission website.


What's being investigated and why?

On 14 January 2021, the Minister of Commerce and Consumer Affairs David Clark called on the Council of Financial Regulators (which includes the Reserve Bank, the Treasury, Financial Markets Authority, MBIE and Commerce Commission) to investigate whether banks and lenders are implementing the CCCFA as intended.

This comes after recent reports of hopeful home owners having their mortgage applications rejected by lenders.

The investigation will look into whether CCCFA has been a direct factor in these changes to lending practices, or whether other factors have also been at play.

For more information on the CCCFA, take a look at the following reliable resources: 


This Money and You Industry News, What is the CCCFA and how does it affect you (Industry News), is accurate at the date of publishing, 18 January 2022 and contains general information only. This Industry News is not intended to constitute financial advice and does not take your individual circumstances and financial situation into account. We encourage you to seek assistance from a trusted financial adviser, legal or other professional advice. The links that are provided or names of third parties are additional resources that you access at your own risk and the FSC takes no responsibility for any third party content. The FSC and its employees make no express or implied representations or give any warranties regarding this information and we accept no responsibility for any loss, damage, cost, or expense (whether direct or indirect) incurred by you as a result of any error, omission, or misrepresentation in this information.

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