18 August 2016
Release no. 14
Acute Finance charged over unreasonable fees and repayment waiver
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.
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.
Four of the charges allege the company 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 that Acute made an unreasonable requirement for borrowers to purchase a repayment waiver when
they took out a loan. The repayment waiver sold by Acute was subject to exclusions. The Commission says it was an
unreasonable requirement to require the borrowers that were subject to the coverage exclusions to buy the repayment
waiver, as they would not receive the full benefit of the waiver if they needed it.
As this matter is before the Court, the Commission cannot comment further at this time.
Background
The Christchurch-based finance company specialised in small personal loans and the charges focus on 67 loan contracts
entered into during the 2014 financial year.
Acute’s repayment waiver was subject to coverage exclusions such as if the debtors made claims from pre-existing
conditions or illnesses, were over 65, were temporary/ seasonal workers or were not full-time employees (including the
unemployed).
In May this year the Supreme Court dismissed Motor Trade Finance Limited (MTF) and Sportzone Motorcycles Limited’s
second and final appeal in the long-running credit fees case brought by the Commission. The ruling, upheld an earlier
High Court and Court of Appeal judgments (in 2013 and 2015) that backed the Commission’s approach to assessing whether
credit fees charged by lenders are reasonable as required by the CCCFA. You can read more here.
ends