Commerce Commission announces investigations into CCCFA breaches

The Commerce Commission announced in October that it has visited 50 credit providers in Auckland, Wellington and Christchurch to check on compliance with the Credit Contracts and Consumer Finance Act 2003, and it currently has 13 investigations underway into alleged breaches. 

Monitoring and enforcement

The Commission described the results of its visits as a "mixed report card for the credit industry".

It has specifically stated that it will take enforcement action against breaches of the Credit Contracts and Consumer Finance Act 2003 (the CCCFA), and has reminded credit providers that this could result in criminal conviction with fines of up to $30,000 or the payment of damages of up to $3,000 per borrower.

However, the Commerce Commission has also said that it will continue to work with the industry to address issues that have come up. For instance, it intends to publish a guide to section 45 of the CCCFA (relating to third-party charges passed on to borrowers).

Warnings

The results of the Commission's compliance monitoring to date are:

1. a warning has been issued to an Auckland business that had not made any changes to its forms or procedures since the introduction of the CCCFA;
   
   
2. an investigation into an Auckland company involved in running buy-back schemes has been completed, with a warning issued to the company about several potential breaches of the CCCFA;
   
   
3. the Commission has issued two warnings to businesses for breaching the disclosure provisions of the CCCFA;
   
   
4. a warning has also been issued to a creditor for a matter relating to a fee charged on early prepayment of a consumer credit contract; and
   
   
5. 13 investigations into alleged breaches of the CCCFA are still open.

"Strategic enforcement areas"

The Commerce Commission has advised that the areas on which it intends to focus its monitoring and enforcement activities are:

1. the initial disclosure of the information required by Schedule 1 of the CCCFA in relation to consumer credit contracts;
   
   
2. breaches of disclosure standards (i.e. the CCCFA's specifications as to how disclosure must be made, including the requirement that all disclosures must be clear and concise);
   
   
3. unreasonable requirements to obtain credit-related insurance; and
   
   
4. unreasonable fees, including the calculation of fees representing a reasonable estimate of a creditor's loss on full prepayment of a consumer credit contract.

For more information, see www.comcom.govt.nz.

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