Non-compliance with the CCCFA will have “serious financial consequences,” says Commerce Commission
The Commerce Commission has ordered Whanganui company Ezi Finance to return over $400,000 to current and former borrowers following a review of its disclosure documents.
The Commission says Ezi Finance has failed to meet its obligations under the Credit Contracts and Consumer Finance Act (CCCFA), as it did not disclose certain key information such as cancellation rights and rights to a variation to their loan to customers. Commission Chair Anna Rawlings says Ezi Finance has accepted the findings of the review, and will update its disclosure documents accordingly.
“In the Commission’s view, Ezi Finance did not meet its legal obligations under the CCCFA because key information required by the Act was left out of its initial loan documents,” Rawlings stated.
“Ezi Finance has acknowledged that this initial disclosure did not comply with the CCCFA. It has updated its documents, given affected borrowers the right information and has agreed to make payments and/or adjustments to their loan balances.”
“It is important for borrowers to receive the key information required by the Act when they enter into loans, including information about their rights under their loan contracts,” Rawlings added.
This is the latest in the Commerce Commission’s crackdown on irresponsible lending, unfair borrower fees and lack of proper disclosure. Earlier in March, it sought approximately $680,000 in borrowing costs and statutory damages to affected borrowers from Linsa Finance, an independent finance company with an annual interest rate in-branch of 49.75%. Mainstream lenders haven’t escaped scrutiny either, with the Commerce Commission having launched an investigation into BNZ’s compliance with the CCCFA specifically focused on disclosure requirements in May of this year.
Ezi Finance offers ‘fast cash loans’ of up to $20,000, with interest rates ranging from 15.95% to 29.75%. Commission Chair Anna Rawlings says failing to comply with the CCCFA will have “serious consequences” for lenders.
“This settlement reflects the fact that, under the CCCFA, failing to provide this information carries serious financial consequences for lenders,” she stated. “Ezi Finance has agreed to repay some of the interest and costs it charged to affected borrowers.”