The Commerce Commission has signed a settlement agreement with finance company Linsa Finance Limited and has discontinued High Court proceedings.
Linsa Finance has agreed to return $350,000 to about 900 current and former borrowers, for failing to disclose key information required under the Credit Contracts and Consumer Finance Act 2003 (CCCFA).
Linsa Finance has offices in Manurewa and Tauranga, offering secured and unsecured personal loans of up to about $4,000.
It accepts that between 6 June 2015 and 29 March 2016 1,721 of its loan contracts failed to include:
an accurate statement of the borrower’s cancellation rights
any statement of the borrower’s right to apply for relief on grounds of unforeseen hardship, and how to do so
the frequency with which continuing disclosure statements would be made
the name and contact details of Linsa’s dispute resolution scheme
The Commission became aware of these omissions when it undertook a review of third tier lenders’ contracts in early 2016.
“Consumer credit law requires lenders to provide borrowers with important information that helps them to understand their rights and obligations under their loan. The information includes what to do if they experience difficulty in meeting their repayment obligations or end up in a dispute with the lender. Linsa failed to provide some of this information to its borrowers. After learning of the Commission’s concerns, Linsa corrected its disclosure and provided corrective disclosure to affected borrowers. It has also agreed to make payments to affected borrowers,” said Commission Chair Anna Rawlings.
“The Commission has resolved a number of cases involving similar breaches of these important consumer credit protections. All lenders need to take proper steps to ensure that they are meeting the disclosure obligations which are very clearly described in the CCCFA” said Ms Rawlings.