2016 review of Section 99(1A) of the Credit Contracts and Consumer Finance Act 2003
Changes were made to section 99(1A) of the Credit Contracts and Consumer Finance Act (CCCFA) in 2019, following a review of this provision. The changes are found in sections 95A and 95B of the CCCFA, which expressly enable a court (on application by the lender) to vary or remove the effect of section 99(1A).
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The changes to section 99(1A)
In June 2018 Cabinet decided to confirm the previous government’s decisions to amend section 99(1A) of the Credit Contracts and Consumer Finance Act (CCCFA). This section relates to the consequences of non-compliant disclosure under the CCCFA.
These decisions were that:
- section 99(1A) of the Act be amended, so that in future a lender has the right to apply to a court for relief from the presumption of 100 per cent forfeiture of all interest and fees
- where a lender breaches section 99(1A) of the Act in the period before its amendment:
- the lender should not have the right to apply for relief from the courts, in respect of any interest and fees it must forfeit for the period between the breach and the entry into force of the amended section 99(1A) of the Act, but
- the lender should have the right to apply for relief from the courts, in respect of any interest and fees it must forfeit for the period between the entry into force of the amendment and the date the breach is discovered and remedied.
This was achieved through the development of new sections 95A and 95B of the CCCFA and by applying these provisions only to fees and interest charges that accrue on loans after their commencement (in December 2019).
Decision documents
Background information for the Cabinet's decision is available in these documents:
EGI Minute of Decision, May 2017 [PDF, 117 KB]
Cabinet Economic Development Committee Minute of Decision, June 2018 [PDF, 142 KB]
Background to the changes
The Credit Contracts and Consumer Finance Act 2003 (CCCFA) covers a range of transactions where lenders give credit to private individuals for personal use, such as through a mortgage, credit card, arranged overdraft or cash loan.
Under sections 17 and 22 of the CCCFA, lenders (or 'creditors') must disclose key information to the debtor. This includes the annual interest rate, any fees that apply, and the details of the relevant dispute resolution service.
A number of legal consequences result from a failure by a creditor to make proper disclosure of this information to debtors. These include a right for the consumer to cancel the loan (section 27) and statutory damages for the lender (section 88).
In addition, section 99(1A) provides that the creditor will forfeit the right to any interest or charges for the period during which non-compliant disclosure was made.
2016 consultation
A discussion paper was released to test different options for amending section 99(1A), following concerns that the current law might lead to lenders being disproportionately penalised.
Consultation opened on 2 November 2016 and closed on 9 December 2016. You can read more about the consultation in the discussion document:
Discussion paper: Section 99(1A) of the Credit Contracts and Consumer Finance Act 2003 [PDF, 804 KB]