Finance company customers to get refunds for faulty contracts.
Failing to include key information in loan contracts has resulted in Aotea Finance crediting or refunding nearly $2.7 million to borrowers.
Aotea Finance has signed a settlement agreement with the Commerce Commission agreeing to return $2.8 million to borrowers in relation to 14,442 loan contracts ($107,000 has already been credited to 103 customers).
Between June 2015 and February 2016, Aotea Finance’s credit contracts lacked key information required by law, including the consumer’s right to apply for changes to a loan agreement in the case of unforeseen hardship.
Commerce Commission chair Anna Rawlings said “lenders must tell borrowers what they are getting into, how much it will cost them, and what options they have if they get into hardship. The law sets out all the key information that lenders must disclose, and borrowers need to understand that information when they take out a loan”.
Ms Rawlings said Aotea Finance has updated its disclosure documents and given borrowers the information required by the Credit Contracts and Consumer Finance Act.
Consumer NZ chief executive Sue Chetwin said it was disappointing these sub-par contracts were offered in the first place.
“Consumer credit law is clear on the information a lender has to provide to customers. When lenders fail to meet their obligations, consumers aren’t getting the full picture when they sign up for a loan,” she said.
Under the settlement with the commission, Aotea Finance is required to provide a review report by April 2020. The report must be prepared by a commission-approved independent accountant.
Affected borrowers that can’t be found or don’t make contact with Aotea Finance by 1 July 2022 will have their refunds given to a charity agreed between the commission and the company.