Contents
The reform package to revamp the financial services sector is on course for passage before the 7 November general elections with all three component bills – the Financial Markets Conduct Amendment Bill (FMC Bill), the Credit Contracts and Consumer Finance Amendment Bill (CCCF Bill) and the Financial Service Provider (Registration and Dispute Resolution) Amendment Bill – now reported back from Select Committee.
Among the big-ticket items are the proposed shift of regulatory functions for the Credit Contracts and Consumer Finance Act 2003 (CCCFA) from the Commerce Commission (Commission) to the Financial Markets Authority (FMA), and the removal of the carve out from the fair dealing provisions in respect of credit contracts from the Financial Markets Conduct Act 2013 (FMCA).
We look at the impact of these changes in detail.
Commission to FMA
There is logic in the FMA, as the conduct regulator for financial markets, holding jurisdiction over the CCCFA. This change has been signalled for two years now, but focus can now turn to the realities of the transfer.
The FMA licensing process for existing CCCFA-certified creditors will be automatic as expected (unlike the similar upcoming re-licensing process for deposit takers under the Deposit Takers Act 2023).
However, at a practical level the shift in regulator will still trigger seismic ripples through the market.
- The FMA’s workload will increase substantially, as it will have a large new cohort of entities to supervise and new (and complex) financial services regulations to absorb.
- The FMA will have a number of powers in its regulatory toolkit that the Commission does not enjoy, and which have the potential fundamentally to alter how the CCCFA is enforced.
- Creditors not currently licenced by the FMA will have a new supervisory relationship to navigate.
- And, critically, it is not clear that reforms will deliver on the Government’s aim to “streamline the financial services regulatory landscape and remove unnecessary compliance costs currently imposed on financial services”1 as both the Commission and the FMA will hold jurisdiction for misleading and deceptive conduct and unfair contract terms in respect of credit contracts, creating new areas of regulatory duplication.
What stays the same?
The FMA and the Commission share a standard suite of enforcement powers under the Financial Markets Authority Act 2011 (FMA Act) and Commerce Act 1986 in that they can both:
- require a person to supply information, documents or evidence
- carry out searches under a warrant
- state a case for the opinion of the High Court on a question of law arising in any matter before it
- accept enforceable undertakings, and
- make confidentiality orders (discussed in more detail below).
Privilege is protected before both the FMA and the Commission. Although there is less protection against self-incrimination before the Commission, the privilege has a relatively narrow scope in any event.
Confidentiality of documents and information
Each regulator both can impose and is subject to confidentiality obligations. Each of these is considered below.
| Regulator’s power to order confidentiality |
Both regulators can prohibit the publication of any information, document or evidence obtained in connection with an inquiry or investigation for the duration of that inquiry/investigation. (There is, however, an express provision permitting disclosure of information with the FMA’s consent, which must not be unreasonably withheld.) As drafted, the Commerce (Promoting Competition and Other Matters) Amendment Bill (Commerce Bill), would allow the Commission to make confidentiality orders that continue for up to 10 years after the conclusion of the investigation or inquiry. |
| Regulator’s obligations of confidentiality |
Currently, the FMA may not publish or disclose any information or documents supplied to it except in specific situations – notably where:
The Official Information Act 1982 (OIA) still applies to the FMA. No such constraints currently apply to the Commission. However, the Commerce Bill would impose an equivalent obligation to keep information confidential. The OIA will also be excluded for a period of 10 years and therefore will not provide a potential avenue for information to be disclosed.
|
In short, while the FMA and the Commission currently have similar powers to make a confidentiality order, the Commission’s order-making powers and its obligations to maintain confidentiality could potentially be far stronger than those of the FMA.
What will change?
The Commission’s well-established expectation that any material contraventions of the CCCFA or Fair Trading Act 1986 (FTA) by creditors will be self-reported (enshrined in its Self-Reporting Guidance for Lenders), will now become a statutory requirement.
Creditors will be required, as a condition of their licence, to self-report to the FMA “as soon as reasonably practicable” if they believe that they have, may have, or are likely to, contravene the FMCA or CCCFA in a “material respect”.
Further, in addition to the standard suite of regulatory powers enjoyed by both the FMA and the Commission, the FMA has (or will be given) a number of tools that the Commission does not possess. Once the Bills to reform financial services come into force, these tools will be available for use in CCCFA enforcement. The FMA will be able to:
- issue a stop order to prohibit the supply of services or prohibit the distribution of information where the FMA considers the CCCFA has (or is likely to be) breached, or where the FMA considers that a communication about a CCCFA service or a disclosure statement is false or misleading. The FMA will also be able to make an interim stop while it determines whether to issue a stop order, if it considers that is in the public interest
- make a direction order where it is satisfied a breach of the CCCFA has or is likely to occur. A direction order may, for example, set out any reasonable steps that a person must take in order to comply with a provision or to avoid or mitigate any actual or potential adverse effects of a breach. In contrast, the Commission was only able to seek a compliance order from the courts
- accept an enforceable undertaking to pay the FMA an amount in lieu of a pecuniary penalty (a power it used twice in 2025, and has used again in 2026)
- require a warning it has issued to be disclosed, for example, on the lender’s website, and
- conduct on-site inspections (discussed in more detail below).
On-site inspection powers
The FMA’s new “without notice” on-site inspection powers are broad and have been modelled on the powers provided to the Reserve Bank under the Deposit Takers Act.
The FMA may enter and remain at any relevant place of business (excluding dwellinghouses and marae) to carry out an on-site inspection where it considers it necessary or desirable for various purposes related to financial markets participants – e.g., whether a financial markets participant is complying with its obligations under financial markets legislation.
The power must be exercised at a reasonable time and in a reasonable manner, but the FMA does not have to give notice. While on-site, the FMA may require any employee, director or agent to answer questions and supply all information and documents the FMA may reasonably require for the inspection.
Once the financial reforms take effect, creditors will be subject to the on-site inspections regime.
The CCCF Bill also provides that certain listed CCCFA-related service providers be subject to the inspection powers – such as lessors under consumer leases, debt collectors and paid advisors.
But the Select Committee, in its report back on the FMC Bill on 30 January 2026, has recommended extending the FMA’s on-site inspection powers to any person that has an obligation under the fair dealing provisions of the FMCA – the rationale being that this would pick up wholesale offerors of financial products who were not otherwise caught.
However, the fair dealing provisions apply to a broad scope of services and entities – including certain entities not in the business of providing financial services. The change greatly extends the scope of the FMA’s on-site inspection powers. Relevantly, for the CCCFA, it will also capture all “relevant CCCFA services” provided in trade. This raises two issues:
- the “relevant CCCFA services” definition is broader and, in particular, purports that any transferee (a person to whom an interest in land is transferred) in trade is caught by the fair dealing provisions. In contrast, the listed CCCFA-related service providers in the CCCF Bill covers transferees under buy-back transactions only (a very specific type of consumer transaction), and
- in both the FMC and CCCF Bills, the CCCFA services definitions have been taken out of the context in which they are used in or regulated by the CCCFA, leading to uncertainty about how broad this regulation is intended to be.
For example, the context of the definition of “paid adviser” in the CCCFA is significantly narrower than the defined term brought across to the FMCA and FMA Act. “Paid advisers” are defined as, among other things, a person who acts for consideration as an adviser to one or more of the parties (excluding an employee of a party). We presume this apparent breadth is unintended, as paid advisors are currently only relevant in the CCCFA in determining whether a contract is a consumer credit contract if the lender is not in the business or practice of entering credit contracts.
It is not clear whether the intention is that any paid adviser to a credit contract (whether they introduce the parties to that contract or not) be subject to the fair dealing provisions and the on-site inspection powers. Given that the on-site inspection power limits the right to freedom from search and seizure, this uncertainty is unhelpful.
Role of the Fair Trading Act in lending
Although the CCCFA will move to the FMA, the Commission will still have jurisdiction over lending under the FTA through its unconscionable conduct, unfair contract terms and broader misleading and deceptive conduct and misleading representations regimes.
Creditors will accordingly face two new areas of regulatory duplication:
- declarations of unfair contract terms under the FTA could be sought by the FMA (once the Regulatory Systems (Economic Development) Amendment Act 2025 comes into force), or by the Commission under its existing FTA jurisdiction, and
- any misleading or deceptive conduct could be enforced by either the FMA (through the fair dealing provisions of the FMCA) or by the Commission (through the FTA).
Creditors should be aware that:
- unless the Commission’s Self-Reporting Guidance for Lenders is revoked, creditors will be expected to self-report any non-compliance to both the Commission and the FMA. While we expect that the regulators will be pragmatic, it remains to be seen how the Commission and the FMA will work together in practice to achieve the stated aims of reducing regulatory overlap and duplication, and
- the Commission will be required to obtain the consent of the FMA before it commences proceedings under the FTA. However, the proceedings will still be valid if consent is not obtained. The regulators may also decide the Commission is the proper regulator to bring enforcement action – such as if there are also issues of unconscionable conduct. Notably, although the Commission has had jurisdiction over credit contracts under both the FTA and CCCFA, it has nonetheless opted to use the FTA in various enforcement actions.
Our thanks to Maisy Bentley for her assistance in preparing this article.
