Finance providers fined $103k

Alternate Finance and Crester Credit Company have been sentenced in Christchurch District Court on four representative charges under the Credit Contracts and Consumer Finance Act (CCCFA).

Both companies pleaded guilty for failing to ensure their credit contracts did not take security interests over prohibited consumer goods.

Alternate Finance and Crester Credit Company are third-tier lenders with the same sole director and lend predominantly to consumers in and around the Garden City.

“The CCCFA prohibits taking a security interest over essential consumer goods, such as washing and cooking equipment, and lenders must ensure contracts do not allow for that to happen,” says commissioner Anna Rawlings.

“The companies didn’t attempt to seize any of the prohibited household items, but the case emphasises that lender contracts cannot suggest that seizure might happen.” 

In sentencing on March 13, Judge Josephine Bouchier said there was “reasonably significant carelessness” and “the objectives of the CCCFA were undermined because the enactment was for the protection of vulnerable consumers.”

The commission reviewed 68 sample Alternate Finance contracts, of which 56 showed security interests over banned items. Of 53 Crester Credit contracts assessed, 43 showed security interests claimed over prohibited items. These included washing machines, refrigerators, microwaves and beds. 

In addition to the fines, the court ordered both companies to pay a total of $21,238 in statutory damages to 99 borrowers.