A Whangārei finance company director has admitted his business' failure to provide all key information to borrowers that prompted an investigation by the Commerce Commission.
David Melville of Profile Finance said his staff were not quick enough in terms of complying with the Credit Contractors and Consumer Finance Act 2003 for nearly 18 months.
Current and former borrowers of Profile Finance will receive $945,334 in credits and refunds after the Whangārei-based company signed a settlement agreement with the commission.
The commission began investigating Profile Finance in November 2017 after receiving a complaint. The investigation found that, between June 6, 2015, and November 28, 2017, Profile Finance did not provide all the key information to borrowers that is required under the Act.
The information included, among other things, the borrower's rights to seek loan changes as a result of unforeseen hardship, the right to cancel the loan, and the total amount of payments including the $1.50 administration fee in some contracts.
Profile Finance entered into 2119 loans during the relevant period.
It was one of several companies that provided loans to customers buying goods at Melville's Home Centre in Whangārei which sells consumer electronics, appliances and furniture.
"At the end of the day, a mistake was made. We've been in business for many years but the law change came into effect a few years ago and we just weren't quick enough in terms of compliance," Melville said.
"It's unfortunate the penalties are harsh but we can't and wouldn't argue with the commission's decision."
Profile Finance will be contacting affected borrowers in relation to the settlement.
However, a commission spokesman said borrowers should contact Profile Finance if they believed they were affected by the settlement or if, for example, their contact details have changed.
"The settlement applies only to 2119 affected loans issued by Profile Finance between June 6, 2015, and November 28, 2017. There may be fewer than 2119 affected borrowers, as each borrower may have more than one loan.
"Affected borrowers will receive a refund or credit of at least $200, which is the minimum amount of statutory damages as set out in the Credit Contracts and Consumer Finance Act 2003 (CCCFA). Affected borrowers may receive more than $200, depending on the amount of their loan.
"Affected borrowers will also receive a share of $100,000 on top of the statutory damages amount. It will be paid on a pro-rata basis, meaning larger borrowers will receive a larger share of the $100,000."
Commission chairwoman Anna Rawlings said failure to provide full and proper disclosure of relevant information deprived borrowers the ability to make informed decisions about taking loans and what to do if they got into difficulty during the term of the loan.
She said all lenders should periodically check they complied with the very clear information disclosure requirements as described in the Act