KEY POINTS:
An Auckland finance company is to refund more than $50,000 to over 2300 customers for breaches of the Credit Contract and Consumer Finance Act.
The Commerce Commission said Gilrose Finance failed to correctly rebate credit-related insurance to some clients who had paid back their loans early, and did not tell customers about default fees that would be charged if they missed payments.
Gilrose Finance provides finance to customers of a number of large New Zealand retailers.
"The Credit Contracts and Consumer Finance Act is very clear about what rebates customers should receive if they pay a loan off early," said the commission's Auckland fair trading manager, Graham Gill.
"The Act also requires disclosure of fees. That means customers must be told upfront about all fees they will be charged." Mr Gill said finance companies were in a position of trust and relatively small amounts of overcharging could be hard for borrowers to detect.
"Companies should not be overcharging and this settlement should be a lesson to others to ensure their systems are correct."
Borrowers should also check the amounts they were charged when paying off their loans early and contact the commission if they suspected any overcharging, Mr Gill said.
Once the commission began investigating, Gilrose Finance had moved quickly to change its practices and refund affected customers.
Under the agreement reached with the commission, Gilrose Finance had revised all its credit contracts to fully disclose its default fees.
- NZPA
