Under the code, aggrieved borrowers could complain to the Commerce Commission, which would rule if there were any breaches of the Credit Contracts and Consumer Finance Amendment Act.
Possible sanctions against lenders include a ban from operating in the finance industry, criminal convictions, compensation payments and the reworking of contracts.
In announcing the code, Commerce and Consumer Affairs Minister Paul Goldsmith said most lenders followed responsible practices.
The new policy was aimed at "loan sharks and unscrupulous payday lenders" engaging in "predatory practices".
But welfare experts and members of the lending industry have questioned the code's ability to crack down on some operations.
Instant Finance chief executive Richard de Lautour - whose company charges just under 30 per cent interest a year - doubted it would improve the ethics of lenders "on the rung below" his firm charging massive fees.
"The ratbags continue as usual," he said.
Darryl Evans, of Mangere Budgeting Services Trust, said the code would not help those most at risk.
The majority of his clients had bad credit records that would stop them from accessing a loan from banks or some of the biggest lending companies.
Many had no other option but to turn to payday lenders offering huge interest rates and tough repayment schedules.
"When they're desperate, they'll go wherever they can to get money," Evans said.
Family Budgeting Services chief executive Raewyn Fox agreed, adding consumers who weren't "financially literate" would still be easy prey.
"Even if you told them, they might not understand what [the interest rate] means."
Criticism that the code didn't go far enough included lack of a maximum interest rate that could be charged.
A Ministry of Business, Innovation and Employment spokesman said that option was rejected as it could potentially restrict access to credit and also "become a de facto target" for lenders.
Fox said although the code didn't go far enough, any initiative looking to clean up the lending industry had to be welcomed.
But borrowers had the ultimate responsibility to protect themselves from being left with a hefty bill.
That included making sure they really needed the loan.
Fox said it was crucial New Zealanders didn't take loans they knew they couldn't service. And those who did take out loans needed to be aware of everything they were signing up for.
"You have to be honest with yourself," she said.
In the 2013-14 financial year, Financial Services Complaints investigated 48 complaints against some of the 260 non-bank lenders registered with the independent dispute resolution service.
Half the complaints were upheld or settled.
One dealt with a $100 payday loan that turned into $566 because of interest and fees when the customer failed to make his final loan payment of $22.
After an investigation, the finance broker ended up accepting the $22 payment as full and final settlement.
