Lower-tier finance company, Cash to You Loans Limited, has appeared in the Napier District Court on 32 charges brought by the Commerce Commission relating to its lending business.

The Commission alleges that Cash to You breached the Credit Contracts and Consumer Finance Act 2003 (CCCFA) on various loans it provided between 1 April 2012 and 31 March 2015.

Cash to You faces charges that it failed to properly disclose to borrowers a repayment waiver fee of up to 15% of the loan. Cash to You is alleged to have charged some borrowers unreasonable credit fees, and default interest of 35% when the loan documents provided for no default interest.

This case is one of several taken recently by the Commission as part of its focus on protecting consumers when they’re borrowing money.

So far in 2016 the Commission has taken six cases against lenders under the CCCFA, and it has also reached two settlements with lenders. Christchurch motor vehicle lender, Dealer Finance Limited, agreed to refund at least $440,000 to customers who were overcharged interest. Payday lender, Cash in a Flash, also agreed to refund customers over $120,000 after the Commission warned it was likely to have breached consumer credit laws.

In addition, this month the Supreme Court ruled in favour of the Commission in its long-running Motor Trade Finance Limited (MTF) and Sportzone Motorcycles Limited credit fees case. The court held that credit fees should only cover costs that are closely related to the particular loan transaction, setting an important precedent.

Cash to You entered no plea and will appear again on 8 June 2016.

As the matter is now before the Court, the Commission is unable to comment further at this time.

Background

The CCCFA helps protect consumers when they're borrowing money. It helps ensure consumers can make informed choices and know what they're agreeing to when they take out a loan or buy on credit. It requires lenders to disclose terms and fees under a credit contract, and regulates the fees and interest that can be charged. The CCCFA was strengthened in June 2015 to include tougher penalties and the introduced Responsible Lending Principles which lenders must now follow. Charges brought against Cash to You relate to the period prior to the law change. You can read more on the CCCFA here.