Non-bank lender to refund $2.7 million to customers

Here’s the information affected borrowers should know

Non-bank lender to refund $2.7 million to customers

Nearly $2.7 million is set to be credited to thousands of borrowers after Aotea Finance group signed a settlement agreement with the Commerce Commission.

The Aotea Finance group of companies agreed to return $2,800,000 to borrowers in relation to 14,442 loan contracts. The sum was reduced by about $107,000, which has already been credited to 103 borrowers.

According to the Commerce Commission, Aotea Finance accepts that between June 2015 and February 2016 its credit contracts did not include all the key information required to be disclosed to consumers under the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

This information included their right to apply for changes to the loan agreement on the grounds of unforeseen hardship, the extent to which the borrower would be indebted if there was a shortfall on a sold repossessed property, and the company’s registration number on the FSPR.

“Aotea Finance’s contracts did not contain the information required in the CCCFA including information about borrowers’ rights,” Commerce Commission chair Anna Rawlings said. “Aotea Finance has updated its disclosure documents and given borrowers the right information, and has agreed to make some payments to affected borrowers.”

Rawlings highlighted lenders’ obligation to tell borrowers what they are getting into, how much it will cost them, and what options they have if they get into hardship – as set by the law.

Aotea Finance has since welcomed the settlement, though says that no complaints have been made by any of its customers to the Commission.

“While this situation was not of our own making, Aotea has agreed to remediate affected customers in order to deliver on our commitment to treat our customers with dignity and respect,” Aotea Finance director Terry Cooke said. “We sought advice on what was required in our disclosure statements. Unfortunately that advice was wrong. We have now put it right and have taken steps to ensure it doesn’t happen again.”

Commerce Commission expects Aotea Finance to provide a final review report by mid-April 2020. If borrowers cannot be found or do not contact Aotea Finance, amounts unpaid after July 1, 2022 will be paid to a charity agreed between the commission and Aotea Finance.