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Commission issues credit fee guidelines

30 June 2017

The Commerce Commission has today released its Consumer Credit Fees Guidelines, to provide guidance for lenders in setting credit fees.

The guidelines describe the Commission’s view on how lenders should approach setting their fees in order to comply with the Credit Contracts and Consumer Finance Act 2003 (CCCF Act), which requires credit fees charged by lenders to be reasonable.

“The guidelines set out the general principles that lenders should take into account and give examples of how these principles might apply in practice. They also give guidance on whether or not particular types of costs can be included in fees,” said Antonia Horrocks, the Commission’s General Manager, Competition.

The guidelines are not exhaustive, nor are they intended to be legally binding.

The CCCF Act was updated in 2015 and the Lender Responsibility Principles and the Responsible Lending Code were also introduced.

“Some of these changes affect the fees provision, so we have also been able to update the guidelines by adding content that addresses these changes,” said Ms Horrocks.

The Commission first issued draft guidelines in 2009 and 2010 but was not able to finalise them until the outcome of the long running Sportzone/MTF case in 2016, in which the Supreme Court made clear that credit fees should only cover transaction-specific costs.

Following that decision, the Commission issued updated draft guidelines and sought submissions on them.

“This has been a long process and we are grateful to the submitters. Once the Supreme Court backed the Commission’s approach to setting credit fees, the Commission had confirmation of its approach to the fees provisions and was in a position to offer clear guidance to credit providers,” Ms Horrocks.