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Court Upholds Commerce Commission view of Fees

In a recent Court of Appeal case, the Commerce Commission has had its position on the charging of fees for Credit Contracts reinforced.

The Court of Appeal’s ruling, made public today, upheld earlier High Court judgments that backed the Commission’s approach to assessing whether credit fees charged by lenders are reasonable as required by the Credit Contracts and Consumer Finance Act (CCCFA).

Commissioner Anna Rawlings said the Court of Appeal has provided a clear statement on the approach lenders should take to the fees they charge.

“The Court’s ruling provides easy to understand guidance for lenders, making it clear that credit fees should only cover costs that are closely related to the particular loan transaction. The Court of Appeal agreed with the Commission that the purpose of the CCCFA is to protect borrowers, especially vulnerable borrowers, by ensuring transparency in the costs of borrowing. Fees should not be used to recover general business costs or to generate profits – that is what interest is for,” Ms Rawlings said.

A copy of the Court of Appeal’s ruling can be found on the Enforcement Response Register