Regulator warns Auckland Council over lending failures in retrofit programme

by Duffie Osental25 Feb 2021

The Commerce Commission has warned Auckland Council over potential lending failures in relation to its “Retrofit Your Home” programme.

The programme, which ratepayers could join from 2011 until 2020, involved Auckland Council offering financial assistance for the improvement of property with insulation, heating, ventilation, or energy efficiency measures.

Read more: Auckland sees surge in new homes – and the numbers are rising

According to the Commerce Commission, loans made through the programme were consumer credit contracts under the Credit Contracts and Consumer Finance Act (CCCF Act), which required Auckland Council to meet certain obligations.

The regulator said that Auckland Council likely breached its obligations under the CCCF Act by failing to make reasonable inquiries before entering into an agreement with a borrower, so as to be satisfied that it is likely that the borrower will make the payments under the agreement without suffering financial hardship; adequately assist borrowers to reach informed decisions as to whether or not to enter into the agreement and be reasonably aware of the full implications of doing so; adequately meet its obligations to publish certain information on its website; ensure that the key information was disclosed to every borrower before the contract was entered into; ensure that it met its obligations in terms of continuing disclosure statements; and ensure payments were credited as soon as practicable.

The Commerce Commission added that Auckland Council “reported the matter to the Commission and has co-operated fully with the Commission’s investigation.”

“[Auckland Council] has advised the Commission that it intends to credit all interest charges and rate penalties charged to affected borrowers, totalling more than $10 million,” the regulator said.

“Auckland Council failed to ensure that it had processes in place to meet its obligations under the law and this went unchecked for a number of years,” said Anna Rawlings, chair of the Commerce Commission. “This case demonstrates the importance of understanding the extent of your obligations. We urge anyone who is entering into arrangements for the sale of goods or services on deferred payment terms to get legal advice about whether they have to comply with the CCCF Act.”

Most Read

NZ Adviser TV