Thirteen of the country's credit providers could face criminal convictions and big fines for failing to meet their obligations to customers.
The Commerce Commission recently completed checks on 50 mostly small providers in Auckland, Wellington and Christchurch to see if they were meeting the requirements of the Credit Contracts and
Consumer Finance Act, which came into force in April.
The industry was given a "mixed report card" after the checks. The commission will not publicly name the businesses it has concerns about.
Thirteen investigations are under way, and the commission is promising to take enforcement action.
"There has been plenty of time to get the house in order," said the commission's fair trading branch director, Deborah Battell. "We will start to take much stronger action."
Those breaching the act can face fines of up to $30,000. They may also be required to pay damages of up to $3000 per debtor.
Consumers Institute chief executive David Russell said credit providers frequently targeted "people at the bottom of the stack" who struggled to grasp what they were getting into.
The law was designed to provide people with better information, Mr Russell said.
"But there is still going to be a group of people who are never going to come to terms with the deal they are being offered because they are desperate and they need money."
Ms Battell said there were several areas where the credit industry needed to lift its game, including:
* Consumers not getting all the information they are entitled to, and the information not being clearly set out.
* Fees that appear unreasonable.
* Consumers being required to take out insurance on credit contracts that appear unreasonable.
The commission had received 169 complaints about credit providers since the law came into being.
The Financial Services Federation, which represents many of the country's credit providers, has no problem with the extra attention from the commission.
"People should be playing by the rules," said federation executive director Justin Kerr.
Mr Kerr said the vast majority of credit granted to consumers was done in accordance with the laws.
