Publications
FSQ Bulletin:
Credit Contracts and Consumer Finance Act prosecution
In the first prosecution under the Credit Contracts and Consumer Finance Act (the Act), a financier has been fined $59,000 and been ordered to pay affected customers a total of $13,700 in damages.
This penalty serves as a warning to financiers that the Commerce Commission means business when it comes to enforcing the consumer protections set out in the Act.
In this case, the court decided that the financier did not adequately disclose the terms and conditions of its loans when it provided faxed and photocopied terms that were impossible to read.
Failure to properly disclose meant that the contracts were unenforceable, and breaches of the Fair Trading Act occurred when the financier told a customer that the contracts were enforceable.
Noting that ensuring consumer finance companies provide adequate disclosure had been an important focus for the Commerce Commission, its General Manager Geoff Thorn stated that "with no limits on the interest that can be charged, it is essential that consumers understand what they are committing to when entering any credit agreement, which is why the disclosure requirements are written into the legislation".
Commenting that the Act, together with the Fair Trading Act, set high expectations on standards of lender behaviour, Mr Thorn also said that "this first successful prosecution should leave the credit industry in no doubt as to its obligations to consumers in this area".
For further information please contact:
Murray King
Partner
Rachel Gowing
Senior Associate
Disclaimer
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
