There were 7,270 complaints to the Commission in the year to June 2017, according to the Commission’s latest Consumer Issues Report.
Of those complaints, 242 were under the Credit Contracts and Consumer Finance Act (CCCFA) and related to lending.
This was up from 164 such complaints the previous year and represented an increase of 22% in 2016/17 as compared to 2015.
Breaking down the 242 lending complaints further, there were 59 complaints about finance companies, 33 about high-cost short term lenders, 25 about motor vehicle lending, and 20 about mobile traders.
There was just one complaint about lending by banks in 2016/17.
Finance companies accounted for 24% of credit complaints to the Commission – which is disproportionally greater than their 2% share of New Zealand’s credit market, the report said.
“However, the proportion of complaints about finance companies has decreased from 43% in 2015.”
CCCFA complaints were dominated by irresponsible lending practices, particularly lender failure to make reasonable enquiries about a borrower’s needs or the affordability of a loan and disclosure.
But repossession practices and consumers finding it difficult to apply for hardship protections from their lender when in financial distress also generated a significant number of complaints.
Commissioner Anna Rawlings said they believe the increase in CCCFA complaints is partially fuelled by work with the budget advisory sector to help them to identify and report potentially unlawful lending practices.
“We are continuing to focus on compliance with consumer credit laws and will prioritise the investigation of irresponsible lending practices in the coming year because of the significant harm it can cause already vulnerable consumers.”
Since 2015, lenders have been supposed to uphold the principles of the Responsible Lending Code, under the CCCFA.
Read more:
