The Commerce Commission has filed High Court proceedings against finance company Linsa Finance Limited, seeking orders that it return costs of borrowing totalling about $680,000 for more than 1,700 loan contracts.
The Commission is also seeking, in the alternative, that Linsa Finance pays statutory damages to affected borrowers.
Linsa Finance has offices in Manurewa and Tauranga, offering secured and unsecured personal loans of up to about $4,000.
The Commission alleges that between 6 June 2015 and 29 March 2016 Linsa Finance’s loan contracts failed to include some of the key disclosure information required under the Credit Contracts and Consumer Finance Act 2003 (CCCFA). The alleged deficiencies affected 1,721 loan contracts.
Failure to disclose the key information means that borrowers are not liable to pay interest or credit fees charged by the lender during the period of non-compliance.
As this matter is now before the Court the Commission will make no further comment at this time.
Costs of borrowing
Section 99(1A) of the CCCFA states that a borrower is not liable for the costs of borrowing (fees and interest) during a period in which the lender has failed to comply with the disclosure requirements of the Act.
The CCCFA allows for the award of statutory damages against a creditor (lender) if the lender fails to:
comply with the rules about disclosure for borrowers and guarantors
comply with the rules about interest - including disclosing interest and how and when it can be charged
ensure disclosure is made about credit-related insurance, repayment waivers or extended warranties.
The minimum and maximum amounts of statutory damages are set out in the CCCFA. The court can reduce the amount of statutory damages or decide the lender doesn't have to pay statutory damages at all.