Finance company in $945k settlement with Commerce Commission

More than 2,000 customers were affected by the company's wrongdong. Photo / Getty Images

A Whangarei finance company has reached a settlement agreement with the Commerce Commission that will see $945,000 in credits and refunds returned to current and former borrowers.

The investigation into Profile Finance dates back to November 2017 after receiving a complaint.

The Commerce Commission found that between 6 June 2015 and 28 November 2017 Profile Finance did not provide all the key information to borrowers as required under the Credit Contracts and Consumer Finance Act.

This included the borrower's rights to seek loan changes as a result of unforeseen hardship; the borrower's right to cancel; the information required in continuing disclosure statements; and the total amount of the payments, including the $1.50 weekly administration fee.

"Profile Finance co-operated with our investigation and it acknowledges that it failed to properly disclose all required information in likely breach of the CCCF Act during the relevant period. It has updated its standard form disclosure statement and made corrective disclosure to borrowers," said Commerce Commission chair Anna Rawlings.

"Failure to provide full and proper disclosure of this information deprives borrowers of the ability to make informed decisions about borrowing money and about what to do if they get into difficulty during the term of the loan. All lenders should periodically check that they are complying with the very clear information disclosure requirements described in the CCCF Act."

The company entered into 2,119 affected loans during the relevant period and will be contacting affected borrowers.

David Melville, a director of Profile Finance, said the company was one of five finance companies Melville's Home Centre used to offer finance to customers.

He said the Commerce Commission investigation first came up around two and a half years ago and was because the disclosure documents did not include all required disclosure information following law changes in 2015. The missing disclosure included (amongst a few other things) the terms for financial hardship and dispute resolution.

When the issue was raised by the regulator, Melville said Profile Finance sent out updated disclosure information including the parts that had previously been missed such as hardship to all current customers immediately.

"Profile Finance was unaware of the breach until it was raised but has co-operated with the regulator to work through the issue and to reach the settlement.

"The disclosure documentation was updated in November 2017."

Melville said Profile Finance would be able to meet its obligation to make the refunds and credits and continue to operate.