ANZ’s Kiwi car finance operation in fees debate

ANZ’s New Zealand-based vehicle finance unit UDC is considering a notice of cilvil proceedings from NZ’s Commerce Commission in relation to potential issues default fees, and will assess its options.

Last week, the Commerce Commission filed civil proceedings in court against the financier. The Commission has not gone public on the issue – with the firm choosing to front-foot it by releasing a statement.

The proceedings relate to whether UDC’s ‘Dishonour and Late Payment fees; meet the requirements for default fees under consumer credit legislation.

“For some time UDC been working with the Commerce Commission to explain how UDC determines the reasonableness of its Dishonour and Late Payment fees under the Credit Contracts and Consumer Finance Act (CCCFA). This legislation sets boundaries around the fees UDC charges consumers,” says UDC chief executive Wayne Percival.

The Commission’s claim relates to two issues.

The first relates to late payment fees charged from June 2015.

“The Commission’s proceeding does not challenge the categories of costs that UDC has sought to recover in its late payment fees,” Percival explains. “Instead, the issue raised by the Commission relates to the way in which UDC averages costs across borrowers, and whether separate averages should be calculated by reference to differing periods of default.”

“Following a long and open dialogue, the Commission is now looking to the courts for a declaration on the matter. UDC believes its fees fairly and reasonably recover the underlying costs it incurs, and that the law allows it to charge the fees on the basis that it does,” Percival says.

“UDC will continue to engage with the Commission to see whether we can reach an agreement with the Commission that resolves this issue.

“UDC takes its compliance with any legislation very seriously and followed a robust process in setting fees, including Dishonour and Late Payment fees, to ensure they are fair and reasonable.”

The second issue is the level of dishonour fees UDC charged historically between June 2015 and September 2016 (from which point the fee was reduced). The Commission has not raised any issue with UDC’s current dishonour fees.