The warning relates to three loans given to borrowers between September and December 2015 by DFL’s agent Nigel Thompson Motor Company Limited (NTMC), now in liquidation.

“The lender responsibility principles require lenders to ensure that they make reasonable inquiries into whether a borrower can make loan repayments without suffering substantial hardship. The Commission’s concern is that DFL, through its agent NTMC, failed to do that,” said Commissioner Anna Rawlings.

DFL provides vehicle finance through 20 Christchurch-based motor vehicle dealers. Each dealer holds a 5% share of the company and acts as agent for DFL in entering into loans, using documentation supplied by DFL.

The Commission investigated three complaints about loans issued by DFL via NTMC:

  • A beneficiary was given a loan despite telling NTMC she had personal debts of $30,000.
  • Another beneficiary was given a loan despite having only $1.65 in her bank account at the time of entering into the agreement.
  • NTMC staff approved a loan to a sickness beneficiary without asking for any documentation other than her passport and driver’s licence.

“In all these cases the Commission is concerned that either DFL obtained insufficient information about the borrower’s financial affairs, or it didn’t sufficiently take into account other relevant information. In each case the borrower’s financial difficulties appeared to be compounded by the loans,” said Ms Rawlings.

“While NTMC was DFL’s agent in all three cases, in our view NTMC did not make sufficient enquiries about the borrowers’ ability to repay the loan to ensure that DFL complied with its obligations. It is important that all lenders using agents to complete their loan documentation have procedures in place to ensure their dealer agents comply with the lender responsibility principles,” said Ms Rawlings.

DFL has advised the Commission that it now ensures its dealers satisfy a checklist of reasonable inquiries before approving finance. It now also reserves the right to undo agreements made by dealers upon review of documentation.

“We acknowledge that DFL had begun developing its procedures before our investigation and that it has settled the debt of two borrowers,” said Ms Rawlings.


For contracts entered into after 6 June 2015, lenders must comply with the Lender Responsibility Principlesunder the CCCF Act.

Those principles require lenders to ensure that, before entering into an agreement, they make reasonable inquiries so as to be satisfied it is likely the loan will meet the borrower’s objectives, and the borrower will meet the payments without suffering substantial hardship. If a lender uses an agent to undertake those inquiries, the lender is still responsible for ensuring that the Lender Responsibility Principles are met.