Car loans under scrutiny

The Commerce Commission has published its 2024/25 priorities for compliance and enforcement, highlighting practices and sectors that will attract the most scrutiny. 

Its spotlight will fall on finance for motor vehicles with action being taken against lenders if they fail to comply with the Credit Contracts and Consumer Finance Act (CCCFA).

When it comes to this legislation, the commission says enforcement will be include rules governing responsible lending practices and lenders who provide credit to vulnerable consumers.

John Small, the regulator’s chairman, says: “Our enforcement priorities put businesses on notice. Where we see unlawful conduct relating to priority areas, businesses should be under no illusion the commission will act.”

The areas cover some types of conduct that will always be a priority given how harmful they can be to New Zealanders. 

These are the commission’s five enduring priorities – cartels, anti-competitive conduct, actions that support our market and economic regulation functions, product safety and vulnerable consumers.

At the same time, the regulator is also placing a particular focus on key areas this year.

These are bid-rigging cartels, non-compete agreements, illegal online sales conduct, breaches in the grocery and telecommunications sectors, car finance and unconscionable conduct.

Small says the priorities have been informed by concerns lodged with the commission by the public as well as market intelligence, investigative trends and events impacting the economy.

“The priorities identify a range of industry sectors – particularly those we consider to be essential to Kiwis – alongside specific competition and consumer-law issues.”

Small acknowledges New Zealanders are facing significant cost-of-living pressures, which is why the focus areas prioritise action against conduct that can contribute to these pressures and disproportionately impact vulnerable consumers.

“The commission received more than 11,000 complaints over the past 12 months. While it’s simply not possible to investigate all of those, concerns raised with us have helped to shape our focus areas, particularly where we see common issues or sectors.”

Small signals there’s more to come following a decision by the commission’s board to “overcommit” its litigation fund, which hasn’t historically been fully utilised due in part to budgeted cases not being contested in court.

“Overcommitting the fund means we can take more action and, importantly, take on significant cases where case law isn’t as clear cut and when the odds of a successful outcome may be lower. We will be a more active enforcer.”

Small notes the priority outcomes will be delivered in large part by the regulator’s consumer and competition teams. This will not detract from enforcement work related to its regulatory roles in telecommunications, energy networks, fuel, the retail-payment system, dairy and airports.

“Of course, there will always be urgent or emerging issues that require action. But for the most part, these seven areas are where we will take concerted action to use our enforcement resources. 

“This is about ensuring consumers are protected and competition preserved. The take-out for businesses is to ensure you’re playing by the rules.

“At the end of the day, it’s about making New Zealanders better off because markets work well, and consumers and businesses are confident market participants.”

The Commerce Commission’s 2024/25 enforcement priorities are:

• Cartels – conduct, such as bid-rigging, that impacts the competitive process for the procurement of public services and infrastructure contracts.

• Non-compete agreements – action will be prioritised when such agreements are unlawfully impacting on competition.

• Illegal online sales conduct – buying products online is increasingly a way of life for Kiwi.

The regulator will prioritise action to protect people from illegal practices, such as fake reviews, misleading scarcity claims and social proof sales tactics, drip pricing and subscription traps.

• Breaches in the grocery sector – inaccurate supermarket prices and price promotions, illegal sales practices, and a focus on compliance by retailers, wholesalers and suppliers with codes and other obligations. 

• Breaches in the telecommunications sector – false, misleading or deceptive marketing, sales or billing practices. There will also focus on compliance with codes and other obligations.

• Motor-vehicle finance – lenders will face action for not meeting their CCCFA obligations, including rules that require responsible lending practices. The regulator is particularly focused on lenders providing credit to vulnerable consumers.

• Unconscionable conduct – this relates to behaviour that substantially departs from expected standards and is so harsh it goes against good conscience. This should rarely occur. But if it does, the commission will act to avoid continuing harm to consumers or businesses