Finance company to refund $1.36m to overcharged borrowers

Consumer finance firm Real Finance has agreed to repay $1.36 million to borrowers, after acknowledging it charged unreasonable fees.

It has entered a settlement with the Commerce Commission, admitting it entered into contracts with borrowers between April 2013 and March 2020 that breached the Credit Contracts and Consumer Finance Act (CCCFA).

The fees charged were more than what was reasonable for the loans to have cost the company.

Commission chair Anna Rawlings said the law had been clear for many years that fees must be reasonable, and lenders should only recover costs that were closely related to the matter for which the fees were being charged.

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“When people borrow money to buy goods on credit, the credit and default fees they are charged are not intended to be used to cover general business expenses or to make a profit,” Rawlings said.

“This case will help lenders to set fees in a way that is consistent with their obligations under credit law. It also shows that regularly reviewing your fees is not sufficient on its own. Lenders also need to act on the findings of any review.”

Real Finance conducted annual fee reviews but did not take action to stop the profits…