Christchurch based finance company, Acute Finance Limited (Acute) has pleaded not guilty to five charges brought by the Commerce Commission under the Credit Contract and Consumer Finance Act 2003 (CCCFA) about its credit fees and its repayment waiver.
Acute specialises in small personal loans and the charges surround 67 loan contracts entered into during the 2014 financial year.
“A repayment waiver is when a lender agrees, for a fee, to give up their right to pursue the borrower for what they owe if they can’t make repayments anymore. For example, if they become sick, injured, are made redundant or die,” the Commerce Commission said in a release.
Four of the charges allege that Acute charged an unreasonable credit fee.
“The Commission alleges that the fee Acute charged for its repayment waiver significantly exceeded its reasonable costs.”
The fifth charge alleges the company made an unreasonable requirement for borrowers to purchase a repayment waiver when they took out a loan, since the repayment waiver sold by Acute was subject to exclusions.
According to The Commission, requiring borrowers that were subject to the coverage exclusions to buy the repayment waiver was unreasonable as they would not receive the full benefit of the waiver if they needed it.
The Commission said it cannot comment further at this time as the matter is before the Court.