Lenders fall foul of disclosure rules
Two finance companies have been forced to return $1.5 million in fees and interest to customers after falling foul of new disclosure rules.
Lenders Adelphi Finance (more than $1.45m) and Shaw Personal Finance ($100,000) returned the money after a Commerce Commission warning.
Law changes last year included an expansion of the key information that lenders must disclose before a loan is entered into.
The commission said the pair had failed to provide their registration number, a full description and explanation of the security interests taken (if any), and details about the timing of the borrower's right to cancel and the borrower's right to apply for relief on grounds of unforeseen hardship.
Both companies had promptly and voluntarily refunded the relevant interest and credit fees to customers, the commission's Anna Rawlings says.
It was vital that borrowers have all the information they need to make an informed decision before taking out a loan, she said.
"In these cases, the lenders have responsibly met with their obligations once the breaches were revealed, and have as soon as possible refunded the money owing - as the Act requires.
"This means that for the period of non-compliance the lenders are not able to make a profit on the loans and will need to meet their own costs."