The Commerce Commission is taking legal action against Westpac NZ, alleging it breached the Credit Contracts and Consumer Finance Act 2003 (CCCFA) by failing to provide key information it’s required to under the law to thousands of its credit card customers.
It says Westpac notified it in March last year that it had failed to provide key initial disclosure information to 19,000 personal credit card customers when they first took out cards between May 2017 and March 2018.
The commission alleges that due to a process error, when Westpac posted new credit cards to some customers, they did not also receive disclosure of the terms of credit. It says it is seeking a declaration that Westpac breached its initial disclosure obligations under the CCCFA and is seeking an order for the return of costs of borrowing to affected borrowers and an order for payment of statutory damages to affected borrowers.
Westpac NZ spokesman Will Hine says in March 2018 the bank discovered that disclosure documents had not been sent to 19,365 new credit card customers.
"This was a result of an error that occurred during an upgrade to IT systems. Corrective disclosure was provided to these customers and we proactively notified the Commerce Commission. We also refunded fees and interest charges to customers who were in default, and have made changes to make sure this issue is not repeated," Hine says.
"We will not be commenting further as the case is before the courts."
Commerce Commission chair Anna Rawlings says it is an important case for consumers.
“This case is important for clarifying the scope of lender liability to borrowers, in a situation where thousands of customers were not provided with initial disclosure required under the law,” Rawlings says.
“The law provides for remediation for customers when their lender fails to give disclosure properly and in this case we are asking the Court to determine whether Westpac breached its obligations, and if so, to decide how those statutory remedies should be applied.”
Under the CCCFA statutory damages can be awarded against a lender if they fail to comply with the rules around disclosure to borrowers and guarantors, as well as if they fail to comply with the rules around the disclosure of interest and how and when it can be charged, as well credit-related insurance, repayment waivers, or extended warranties.
3 Comments
I agree. Some fixed penalty of $50 per customer is probably more reasonable. If you always paid off your credit card on time then you wouldn't have any cost of borrowing, except perhaps the annual card fee itself.
Westpac seem to have already tried to make amends anyway:
"We also refunded fees and interest charges to customers who were in default"
The essential elements of a contract include consensus. The borrower must know in advance if forming a contract exactly what that contract is about and all the details such as satisfaction. No details provided then it is not a contract. It is about time the Courts made this clear.
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