NZ Lenders Breached Lending Rules: What Car & Personal Loan Borrowers Should Know

Before transferring responsibility for consumer-credit regulation to the Financial Markets Authority, the Commerce Commission announced final settlement agreements with ASB, TSB and Nelson Building Society. All three admitted breaches of lender-responsibility requirements under the Credit Contracts and Consumer Finance Act.

The June announcement covered ASB Bank, TSB Bank and Nelson Building Society. The specific problems were not identical at each lender, so the cases should not be treated as one single type of breach.

According to the Commerce Commission, ASB self-reported and admitted breaches relating to overdrafts. These included failures to conduct required affordability and suitability assessments when establishing or varying some overdrafts, inadequate processes for required disclosure and failures to detect and reimburse customer overpayments.

TSB also self-reported. The Commerce Commission said the bank admitted that its processes, controls and governance were not sufficient to consistently ensure compliance with lender-responsibility requirements for its overdraft products. Some breaches resulted in borrowers being overcharged, while others involved borrowers not receiving all of the information they should have received.

Nelson Building Society admitted breaches involving interest overcharges, inadequate systems for continuing disclosure and loan changes, and failures to properly assess affordability for 37 migrant workers. In September 2026, the High Court ordered Nelson Building Society to pay an $825,500 pecuniary penalty.

Affordability assessment is intended to reduce the risk of consumers entering credit that they cannot repay without substantial hardship. The precise obligations depend on the law and circumstances applying to the lending, but affordability remains an important part of New Zealand's consumer-credit framework.

Suitability is about whether the credit is appropriate for the borrower's requirements and objectives. It is different from affordability: a borrower might technically be able to make repayments while the particular product still does not appropriately meet what they need.

Consumer-credit disclosure gives borrowers important information about the agreement they are entering. Depending on the contract and circumstances, this can include information about interest, fees, repayments, security and other important terms.

An overcharge can arise when a lender collects more than it was entitled to under the agreement or applicable law. The exact remedy depends on the circumstances. In the cases announced by the Commerce Commission, affected borrowers were to be proactively remediated by the relevant lender if that had not already happened.

When announcing the final settlements, the Commerce Commission reflected on its 20 years of CCCFA enforcement. It said it had overseen remediation of close to $90 million back to consumers and had secured penalties and reparations totalling more than $100 million.

The Commerce Commission says it took more than 60 cases to court during its 20 years overseeing the CCCFA. Those cases covered lenders across the market rather than only large banks.

Responsibility for the CCCFA moved from the Commerce Commission to the Financial Markets Authority on 1 July 2026. The FMA also took responsibility for active CCCFA cases and relevant information held by the Commerce Commission.

The FMA says it can use a range of regulatory responses depending on the seriousness of misconduct. These include warnings, direction orders, stop orders, action plans, licence conditions and, in serious cases, licence suspension or cancellation. Litigation remains available for serious breaches.

When it took over regulation, the FMA identified several initial areas of focus. These included suitability and affordability assessments, remuneration structures and conflicts of interest, and complaints handling.

Many vehicle-finance agreements used by consumers can fall within New Zealand's consumer-credit framework. The enforcement cases therefore provide a broader reminder for car-finance borrowers to understand what they are signing, check the amounts being charged and keep copies of their loan documents.

Personal and cash loans are common examples of consumer credit identified by the FMA. Borrowers should understand the interest, fees, repayment obligations and other conditions applying to the loan before agreeing to it.

Start by checking your credit agreement, disclosure documents and transaction history. If you believe the lender has charged the wrong amount or failed to meet an obligation, contact the lender and ask for an explanation. Keep records of your communication and any calculations or documents relevant to the issue.

The cases do not mean every lender or every consumer loan has a problem. They do show why affordability processes, accurate charging, clear disclosure and lender compliance systems matter. Borrowers can also protect themselves by reading their agreements and checking that what happens on the account matches what was disclosed.

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