New Zealand High-Cost Consumer Credit Contracts; Direct Debit fee may be reduced but Payment still includes the full fee
For a High-Cost Consumer Credit Contract paid by Direct Debits the following scenario may occur.
When the Direct Debit Payment Method is setup to charge a fee and the payment is grossed up to include the fee you can end up with the direct debit "payment" being too high when the fee is reduced.
For example, normally if the Direct Debit Payment is $102, inclusive of a $2 fee, the $2 fee is charged and the $102.00 Direct Debit payment is created; meaning the Loan has a net $100 credit. However, if the Cost of Borrowing is already exceeded and therefore no more fees can be charged, the fee of $2 was reduced to $0, but the $102 payment is still direct debited.
This has been changed so the Fee is reduced when calculated, rather than when committed.
The following standard Summary Page block has been updated:
- Version 1.01, Last updated 4/05/2020