The Commerce Commission has reached an out of court settlement with three companies from the finance industry that will see $200,000 paid to 295 customers.
The Commerce Commission has reached an out of court settlement with three companies from the finance industry that will see $200,000 paid to 295 customers.
In March 2009, the Commission filed civil proceedings in the High Court against Bluestone Mortgages NZ Limited, Trustees Executors Limited and TEA Custodians (Bluestone) Limited (together Bluestone) in relation to alleged breaches of the Credit Contracts and Consumer Finance Act 2003 (CCCF Act).
The Commission was concerned that Bluestone charged some customers an unreasonable ‘deferred establishment fee’ when they repaid their loan within the first four years. The Commission was of the view that the deferred establishment fee charged by Bluestone was an unreasonable fee under the CCCF Act.
The Commission has settled this case following a decision of the High Court in August 2012 where Bluestone successfully argued that the Commission was out of time to bring claims on behalf of a number of borrowers who had paid the deferred establishment fee. This reduced the number of borrowers covered by the Commission’s case.
Bluestone does not accept that it has breached the CCCF Act and has made no admission of liability.
The Commission is in the process of finalising the method for calculating payments to eligible Bluestone borrowers and will contact them regarding the settlement in the New Year. Eligible borrowers are those who entered into a consumer credit contract with Bluestone between 27 March 2006 and 13 October 2006 and were charged a ‘deferred establishment fee’ when they repaid their loan within the first four years.
Background
The Commerce Commission is responsible for enforcing the Credit Contracts and Consumer Finance Act 2003. The Act provides important protection to borrowers who get a mortgage, use a credit or store card, have a personal or cash loan or an arranged overdraft, or buy goods and services on credit.
The Credit Contracts and Consumer Finance Act imposes rules for lenders who want to charge fees under consumer credit contracts. You can find out more in the Commission’s fact sheet on fees available on our website.
