KEY POINTS:
Geneva Finance has agreed to pay more than $500,000 back to former customers after admitting it breached the law by not providing them with rebates on insurance when debts were paid early.
The company made an out-of-court settlement with the Commerce Commission to refund $510,966 to 3700 customers, after breaching the Credit Contracts and Consumer Finance Act.
In a statement the company said it regretted that "its processes were not sufficiently tight to prevent this error and has apologised to all affected customers".
The company had not provided rebates on payment protection insurance premiums for loans repaid between April 2005 and December 2007, the commission said.
Those insurance policies ensure repayments will be made if debtors are unable to meet them for reasons including accident, sickness or redundancy.
During the period, about 24,000 loans were repaid early or terminated by Geneva Finance, of which about 3700 did not receive the correct rebate.
Geneva Finance had been co-operative and provided rebates when the issue was identified, said commission chairwoman Paula Rebstock.
"Many consumer finance companies require customers to take out payment protection insurance.
"When customers wish to repay their loans early they rely on creditors to calculate the correct settlement balance, including any rebates due to them. We expect others in the industry to ensure that they are not making the same mistakes Geneva Finance made," Rebstock said.
Geneva also settled out of court with the commission in October over breaches of the Fair Trading Act and refunded $589,114 to over 900 debtors who had been overcharged fees and interest.
- ADDITIONAL REPORTING BY NZPA
