When you borrow money from a lender, the lender has to give you important information about the loan. If the lender doesn’t give you this information, they may not have acted in accordance with the law.
A lender has to provide you with important information about your loan. This includes things like how much you’re borrowing, how much you’ll have to pay back, and any fees or charges. Disclosure means that they’ve given you all this information in writing.
If you don’t receive this information, your lender may have failed to meet their obligations under the Credit Contracts and Consumer Finance Act 2003 (the CCCFA).
It’s important for you to know exactly what you’re getting into when you take out a loan. Understanding how much it will cost you, what you’re responsible for, and what rights you have is important.
The lender has to give you this information so you can make a choice about whether to go ahead with the loan. If they don’t give you this information, you may need help to sort things out.
Mrs Day’s* missing contract
Mrs Day wanted to buy a boat and refinanced her loan to do this. A few months later, the lender asked Mrs Day to sign a new contract, because it had lost the original. Mrs Day did not sign it and made a complaint. She thought the original contract terms did not exist anymore.
The IFSO Scheme confirmed the contract did still exist and it was able to view a copy of it. However, the lender had not provided important information to Mrs Day in the original contract; it had only been provided to Mrs Day about 10 months later. The lender offered to make a payment to Mrs Day to reimburse her for the interest and charges on the loan for 10 months. Mrs Day decided not to accept this offer and instead decided to refer her complaint to the Commerce Commission.
Mr Dee’s* credit card confusion
Mr Dee complained his credit card statements were not accurate. He also said the interest-free repayments were not explained to him before he took out the credit card.
The IFSO Scheme reviewed the information that the lender had given to Mr Dee. The IFSO Scheme found that the lender had provided Mr Dee with the right information at the right time.
*Names have been changed
There are 3 times when a lender should give you important information:
Other times a lender might need to give you more information are:
The type of information that must be included when you take out a loan includes:
The lender must give you this information in writing.
You can ask your lender for information about your loan. You should do this in writing to the lender, if possible.
The type of information the lender should give you, if you ask, is:
If a lender has failed to give you the required information, there may be remedies available under the CCCFA.
If the lender hasn’t given you the right information when you arranged the loan, it still needs to give you this information, and it should make a corrective disclosure to you with the required information.
You will still need to pay back the balance of the principal debt you owe, but you can ask the lender to refund you for the costs of borrowing (like fees and interest) until this information is given to you.
If you are behind in your loan repayments, the lender may not be able to take debt enforcement action until it gives you the important information.
I don’t think I’ve been provided this information about my loan – what do I do now?
You can request a review of your situation through your lender’s internal complaints process. If you are unhappy with the complaint response, you can ask the IFSO Scheme to investigate your complaint, for free.
If you would like the support of a financial mentor to help understand your circumstances, you may wish to contact Moneytalks. Moneytalks is a free service that supports people and whānau to manage their money and obtain the financial support they need.
You didn’t receive any documentation when you took out the loan
If you don’t remember receiving important information about the loan when you arranged it, ask your lender for this. If the lender cannot provide you with the information, you should make a complaint so it can be reviewed.
You’ve made changes to your loan but didn’t receive any information
You can ask your lender to confirm what information it provided to you when changes were made to your loan. If the lender cannot provide you with the information, you should make a complaint so it can be reviewed.
You can’t find your lender’s terms and conditions on its website
If your lender has a website, it should make its terms and conditions (the contract) available on its website. If you can’t see them there, let the lender know. If they do not update the website, you can escalate the matter to the Commerce Commission.