Commission files High Court proceedings against UDC Finance

In the period covered by the proceedings, UDC offered consumer loans of $10,000 or more over terms of one to five years, typically secured against assets such as vehicles.

The Commerce Commission has filed High Court proceedings against UDC Finance Ltd, alleging that it charged unreasonable default fees.

In the period covered by the proceedings, UDC offered consumer loans of $10,000 or more over terms of one to five years, typically secured against assets such as vehicles.

The Commission alleges that UDC’s dishonor fees and late payment fees were unreasonable, in that they exceeded UDC’s reasonable costs and an estimate of losses.

UDC charged the dishonor fee if the borrower missed a scheduled payment and charged the late payment fee if the borrower had not made payment 7 days after it was due. The Commission alleges that each fee exceeded UDC’s costs and estimated losses associated with a missed payment or with a 7-day default respectively.

In the case of the late payment fee, UDC calculated its fee by including recovery costs that it did not actually incur until much later (if at all).

The dishonor fees alleged to be unreasonable were charged between 6 June 2015 and 4 September 2016. The late payment fees alleged to be unreasonable were first charged on 6 June 2015 and continue to be charged.

The Commission seeks a declaration that UDC breached the Credit Contracts and Consumer Finance Act 2003 (CCCFA) by charging unreasonable fees. It also seeks orders compensating borrowers for amounts paid in excess of a reasonable fee.

As this matter is now before the Court the Commission will make no further comment at this time.