Finance group to repay $2.7m
Nearly $2.7 million will be credited or refunded to thousands of borrowers following a settlement with the Commerce Commission.
The Aotea Finance group of companies has signed a settlement agreement with the commission and will credit or refund current and former affected borrowers.
The Aotea Finance group comprised four separate companies operating across Auckland, with a common director and common shareholders, and a single general manager.
The group has agreed to return $2.8m to borrowers in relation to 14,442 loan contracts, less about $107,000 already credited to 103 borrowers.
Aotea Finance admitted 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.
The contracts failed to disclose information such as the right to apply for changes to a loan agreement on the grounds of unforeseen hardship, an explanation of the extent to which a borrower would remain indebted if there was a shortfall on selling repossessed property, and the companies’ registration numbers on the Financial Service Providers Register.
Since the start of 2015, the commission said, it had received 30 complaints about the Aotea Finance group of companies. ‘‘Some of those complaints, received in early 2016, were unrelated to disclosure but led us to review its contract, resulting in the settlement,’’ the commission said.
Aotea said it welcomed the settlement and described the lapses in providing information as ‘‘technical’’.
‘‘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,’’ Aotea Finance director Terry Cooke said. ‘‘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 has updated its disclosure documents and has given borrowers the correct information, and has agreed to make some payments to affected borrowers,’’ commission
‘‘Aotea has agreed to remediate affected customers.’’ Aotea Finance director Terry Cooke
chairwoman Anna Rawlings said. ‘‘Lenders must tell borrowers what they are getting into, how much it will cost them, and what options they have if they get into hardship.
‘‘The law sets out all the key information that lenders must disclose, and borrowers need to understand that information when they take out a loan,’’ she said. By mid-april 2020 Aotea Finance will provide, at its expense, a final review report prepared by an independent accountant approved by the commission.
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. There are now five companies in the Aotea Finance Group. Aotea Finance (Takanini) began trading during the commission’s investigation. The disclosure rules ensure borrowers have details about their loan, and a written record of the key terms of their contract, before they enter into it.
The rules also help borrowers keep track of their debt throughout the terms of the loan.