The Commerce Commission has signed a settlement agreement with loan provider Linsa Finance, which has agreed to return $350,000 to approximately 900 current and former borrowers.
The Commission filed proceedings against Linsa Finance in March of this year, pursuing orders that it return borrowing costs of approximately $680,000 across 1,700 loan contracts.
The Commission alleged that Linsa’s loan contracts had failed to include key disclosure information under the Credit Contracts and Consumer Finance Act (CCCFA), and that borrowers were therefore not liable for interest or credit fees during the period of non-compliance.
High Court proceedings have now been discontinued, and Linsa Finance has accepted that 1,721 of its loan contracts had failed to include various key information, including statement of borrowers’ cancellation rights and the name and contact details of Linsa’s dispute resolution theme.
Commission Chair Anna Rawlings has emphasised the importance of loan providers being on top of the information they must legally provide to customers, and noted that the Commission has been involved in a number of similar cases.
“Consumer credit law requires lenders to provide borrowers with important information that helps them to understand their rights and obligations under their loan,” Rawlings said.
“The information includes what to do if they experience difficulty in meeting their repayment obligations or end up in a dispute with the lender. Linsa failed to provide some of this information to its borrowers. After learning of the Commission’s concerns, Linsa corrected its disclosure and provided corrective disclosure to affected borrowers.
“It has also agreed to make payments to affected borrowers.”
“The Commission has resolved a number of cases involving similar breaches of these important consumer credit protections,” she added.
“All lenders need to take proper steps to ensure that they are meeting the disclosure obligations which are very clearly described in the CCCFA.”