Media Releases

16 November 2006

Credit Law Shows It Has Teeth

The first successful prosecution of a credit provider under the Credit Contracts and Consumer Finance Act shows that this law has teeth and is working effectively for consumers says Consumer Affairs Minister Judith Tizard.

The Minister is delighted with the Commerce Commission’s successful action against a credit provider in the Auckland District Court. Senate Finance, which provides finance to the customers of car dealers, was fined $59,000 for giving customers terms and conditions they could not read. Seventeen affected customers were also awarded a total of $13,700 in statutory damages.

"This should serve as a warning to all credit providers. Comply with the law or you will be prosecuted," says Judith Tizard.

"This prosecution and the prospect of subsequent actions against other providers shows that the law is working."

The Credit Contracts and Consumer Finance Act (CCCFA), which came into effect on 1 April last year, provides consumers with better protection when they take out a loan or buy goods on credit.

One of the key features of this legislation is to ensure that consumers have access to better information disclosure than under the previous law.

"Clearly Senate Finance Limited did not comply with this provision and by failing to properly disclose the terms and conditions of its contracts they have now paid the price."

The CCCFA has also strengthened the enforcement powers of the Commerce Commission. This has meant it can take action in response to breaches of the law. It has shown, with its action against Senate Finance, it will use its powers to ensure consumers are protected and standards are met.

"Consumers should take heart that credit providers will not get away with breaking the law."

This prosecution sends a strong message to credit providers that if they do not comply with the Credit Contracts and Consumer Finance Act they may find themselves before the Courts.