Latest news with #CCCFA
1News
5 days ago
- Business
- 1News
National accused of putting needs of banks before everyday Kiwis
The National Party is being accused of putting the needs of banks before everyday Kiwis after introducing legislation that could mean two big Australian-owned lenders avoid paying millions of dollars in refunds. One customer said the amendment to lending laws would allow the banks to get off "scot-free" while the minister in charge said it simply allowed the courts to have more discretion in settling disputes. The Credit Contracts and Consumer Finance Act (CCCFA) passed its first reading in Parliament last week and included a retrospective amendment relating to consequences for historical disclosure breaches by lenders. An investigation by the Commerce Commission had found two banks did not disclose the necessary information regarding customer loans. It meant the banks were potentially liable to refund millions of dollars in fees and interest. 'We should just be able to trust our bank' ADVERTISEMENT Lawyer Scott Russell, acting on behalf of those taking the class action, said the omission regarded "core business" for the banks. 'It's simple stuff. It's disclosure rules that allow ordinary New Zealanders to understand their financial position,' Russell said. Anthony Simons, a small business owner, was among the 170,000 customers who' took legal action against ANZ and ASB banks. 'We're just a hardworking Kiwi family trying to pay off our mortgage, struggling sometimes, and we should just be able to trust our bank that they're going to do the right thing in disclosing the right information,' Simons said. But, after four years battling through the courts, the Government last week passed the first reading of the legislation which changed the rules — retrospectively. Banks entitled to 'judicial fairness' – Minister The Minister for Commerce and Consumer Affairs, Scott Simpson, said the bill before Parliament did not affect the class action. ADVERTISEMENT 'What it does is it gives the courts the ability to use their discretion about what will be a fair and equitable outcome to the case,' he said. 'Banks, no matter what you may or may not think of them, are surely entitled to the same judicial fairness as any other entity or person.' A Cabinet paper by the minister released last month highlighted the class action against the banks, adding that "addressing these concerns through retrospective legislation is likely to attract criticism". 'Well, there will be criticism because it is retrospective and retrospective legislation is unusual but not completely unknown in our political system,' Simpson said. Russell claimed it was unfair. 'We've taken it right through to the Supreme Court and, right where we're getting to crunch time, the banks have contacted their mates in the National Party who have agreed to potentially wipe these refunds. It's hundreds of millions of dollars,' he said. Possible changes 'don't take any rights away from consumers' – banks ADVERTISEMENT ANZ and ASB Bank said the proposed amendments to the bill would not halt the current class action – or future cases. In a statement to 1News, ANZ said the proposed amendments "will not stop the current class action progressing, nor will it prevent potential future cases". "They will simply confirm that when considering these cases, the court has discretion to decide what a fair outcome should be. This change does not remove the rights and protections of consumers.' ASB Bank, meanwhile, told 1News that the potential changes "don't take any rights away from consumers, and will not prevent the current court case, or any future cases, from proceeding". "They simply clarify a confusing piece of legislation and confirm that the court has jurisdiction to decide on an outcome that is fair and reasonable.' Simpson added that, currently, for cases that occurred between 2015 and 2019, the courts could only hand down one penalty. 'And that is a full refund of all interest and all fees, no matter how small or minor the error or omission was,' he said. ADVERTISEMENT But Russell said penalties "are clear under the legislation". "All of a sudden, those penalties are being wiped out and replaced with something that's not clear which is what is a reasonable penalty.' While all three coalition parties supported the bill at its first reading, NZ First had concerns about the retrospective aspect and wanted to hear more official advice and public feedback before deciding if it would back the bill entirely. The issue would now be considered by a Parliamentary select committee.
RNZ News
7 days ago
- Business
- RNZ News
El Cheapo Cars to pay customers $340k after failing to give key loan information
Photo: Supplied/ Pixabay CC 0 Car dealer El Cheapo Cars will have to pay more than $340,000 to customers after pleading guilty to seven charges under the Credit Contracts and Consumer Finance Act (CCCFA). The charges were filed by the Commerce Commission and related to El Cheapo Cars' failure to give borrowers key information about their loans. It was also fined $115,000. Commerce Commission general manager for competition, fair trading and credit, Vanessa Horne, said the commission was particularly interested in protecting vulnerable consumer groups. "One of the commission's enforcement priorities is to take action where we consider motor vehicle finance lenders have not met their obligations under the CCCFA. We are particularly focussed on motor vehicle lenders who are providing credit to vulnerable consumers. "For many Kiwis the purchase of a car is one of the biggest financial commitments they will make. The CCCFA is there to protect consumers when they borrow money or buy goods on credit, and under the CCCFA, consumers have a right to be provided upfront information about any changes to their loan." El Cheapo Cars breached its variation disclosure obligations under the CCCFA when providing personal and vehicle finance to borrowers between 2015 and 2021. In his sentencing notes, Judge Sainsbury said disclosure obligations were among the most fundamental protections under the CCCFA. "Particularly those related to ensuring consumers are aware of their rights and obligations under the consumer credit contract." Horne said the decision was a win for consumers and borrowers, who could be entitled to compensation. El Cheapo will have to pay $341,931.46 to affected borrowers. "This case should send a strong signal to motor vehicle financiers that non-compliance with disclosure obligations will not be tolerated. "Transparency and accountability are fundamental to responsible lending and are key to building consumer trust and upholding market integrity." Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation. The commission said it would contact affected people shortly. The commission began its investigation into El Cheapo in October 2021, after a complaint.
1News
7 days ago
- Automotive
- 1News
El Cheapo Cars fined, ordered to repay $340k for loan disclosure breaches
A Wellington-based car dealer and financier has been ordered to pay more than $340,000 in compensation to hundreds of borrowers after it breached lending rules. El Cheapo Cars was also fined $115,000 after pleading guilty to seven charges brought by the Commerce Commission under the Credit Contracts and Consumer Finance Act (CCCFA). An investigation by the Commission found last year that borrowers were not provided key information when changes were made to existing loans between 2015 and 2021. "Customers would often increase their loan amount with El Cheapo to cover other costs that had come up, like buying new tyres, and El Cheapo did not give its customers disclosure of the changed terms," said acting general manager of credit Sarah Bartlett last year. Disclosure should have included information on the repayment amounts, interest owed and loan period, which had increased in most cases. ADVERTISEMENT In his sentencing notes at the Porirua District Court today, Judge Noel Sainsbury said disclosure obligations, particularly those about consumer rights and obligations, were "among the most fundamental protections" under the CCCFA. "The importance of lenders adhering to disclosure requirements is undeniable." The protection of vulnerable consumer groups was a "core priority" for the Commerce Commission, said general manager for competition, fair trading and credit, Vanessa Horne. "We are particularly focussed on motor vehicle lenders who are providing credit to vulnerable consumers." Horne said for many Kiwis, the purchase of a car was one of the biggest financial commitments they would make. "The CCCFA is there to protect consumers when they borrow money or buy goods on credit, and under the CCCFA, consumers have a right to be provided upfront information about any changes to their loan." She said sentencing was a "win for consumers and borrowers affected by El Cheapo's failures". ADVERTISEMENT "This case should send a strong signal to motor vehicle financiers that non-compliance with disclosure obligations will not be tolerated." Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation. The Commission would be reaching out to affected parties shortly, it said. "The Commission has also filed civil proceedings against Go Car Finance and Second Chance Finance in the High Court, with allegations that both lenders also breached the CCCFA when providing car finance to borrowers."
Scoop
7 days ago
- Automotive
- Scoop
El Cheapo Cars Ordered To Compensate Hundreds Of Borrowers Following Criminal Charges
El Cheapo Cars has been sentenced in the Porirua District Court for its failure to provide key information to borrowers about their loans. The Wellington-based motor vehicle trader and finance lender had pleaded guilty to seven charges the Commission filed under the Credit Contracts and Consumer Finance Act (CCCFA). El Cheapo Cars has now been fined $115,000 and ordered to pay $341,931.46 in compensation to hundreds of affected borrowers. Commerce Commission General Manager for Competition, Fair Trading and Credit, Vanessa Horne, says that protecting vulnerable consumer groups is a core priority for the Commission — making this case particularly important. 'One of the Commission's enforcement priorities is to take action where we consider motor vehicle finance lenders have not met their obligations under the CCCFA. We are particularly focussed on motor vehicle lenders who are providing credit to vulnerable consumers. 'For many Kiwis the purchase of a car is one of the biggest financial commitments they will make. The CCCFA is there to protect consumers when they borrow money or buy goods on credit, and under the CCCFA, consumers have a right to be provided upfront information about any changes to their loan,' says Ms Horne. El Cheapo Cars breached its variation disclosure obligations under the CCCFA when providing personal and vehicle finance to borrowers between 2015 and 2021. In his sentencing notes, Judge Sainsbury emphasised that 'Disclosure obligations are among the most fundamental protections under the CCCFA, particularly those related to ensuring consumers are aware of their rights and obligations under the consumer credit contract' and noted 'the importance of lenders adhering to disclosure requirements is undeniable'. Ms Horne says, 'The Commission considers this to be a win for consumers and borrowers affected by El Cheapo's failures, who may be entitled to compensation,' 'This case should send a strong signal to motor vehicle financiers that non-compliance with disclosure obligations will not be tolerated. 'Transparency and accountability are fundamental to responsible lending and are key to building consumer trust and upholding market integrity,' says Ms Horne. Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation. The Commission will be reaching out to affected parties shortly. Background The CCCFA protects consumers when they borrow money or buy goods on credit. It sets out the rules that must be followed by lenders when they provide loans. The Commission opened its investigation into El Cheapo in October 2021, following a customer complaint. The Commission has also filed civil proceedings against Go Car Finance and Second Chance Finance in the High Court, with allegations that both lenders also breached the CCCFA when providing car finance to borrowers.
NZ Herald
18-05-2025
- Business
- NZ Herald
What to avoid doing when trying to buy your first home
With the prospect of another cut to the Official Cash Rate this month likely to improve things for borrowers, first home buyers are being advised they still need to ensure they have their finances in order. Senior adviser and director of The Loan Market, Cameron Marcroft, told Nadine Higgins on The Prosperity Project podcast that it's a great market for first home buyers. 'The lending criteria has got a little bit easier now, the rates have dropped as well. When rates are dropping, it also means that the test rate that the banks use to assess you drops as well, so that means clients can borrow more'. But that doesn't change the fact that how you manage your finances matters when it comes to getting a mortgage. For example, Marcroft says your credit card can count against you, even if you don't have an outstanding balance owing. 'The limit is what the banks use to put against your expenses – the general rule of thumb is about 3% of that limit. So, if it's a 10k limit, $300 would be put against their expenses every month. So, what it does is it just drags their borrowing ability down.' He says options to boost your ability to borrow include reducing your limit or getting rid of your credit card for a while. Marcroft says while banks are no longer going through expenses line by line like they did before the Credit Contracts and Consumer Finance Act (CCCFA) legislation was amended, it's still important to paint a positive picture. 'If you're spending large in a certain area and showing certain trends in these bank statements, it's really important for us to provide commentary around, 'Hey, we were spending that money because we didn't have many commitments. Now we're getting into a large mortgage, we know damn well we can't spend there'.' Marcroft says while interest rates are low and banks are busy, he doesn't expect house prices to boom anytime soon. 'I don't see that probably happening again for a long, long time. I really think we'll see a gradual climb in property prices.' Listen to the full episode of The Prosperity Project for more advice on getting sorted for your first home. The podcast is hosted by Nadine Higgins, an experienced broadcaster and a financial adviser at Enable Me.
