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MTF case reaches Supreme Court

A long-running battle over what exactly lender credit fees should cover has hit the Supreme Court this week.

Thursday, November 12th 2015, 9:50AM

by Miriam Bell

NZXZ-listed Motor Trade Finance (MTF) and the Commerce Commission are seeking a final verdict on what can be charged for various fees under the Credit Contracts and Consumer Finance Act 2003.

The case is important as it will set a precedent and lay down the rules on lender credit fees.

MTF is appealing a Court of Appeal decision earlier this year that the fees charged by MTF were unreasonable under section 41 of the CCCFA.

The Court of Appeal upheld the findings of lower courts in its decision and found that lender credit fees should only cover costs closely related to the particular loan transaction.

MTF’s day in the Supreme Court has been a long time coming.

Its origins date back to a complaint about MTF and one of its shareholders, Sportzone Motorcycles, which was laid with the Commerce Commission back in 2006.

The complaint led to a Commerce Commission investigation into the lending practices of MTF and Sportzone.

Both companies were charged with charging unreasonable establishment fees, account maintenance fees, and arrears fees on 39 finance contracts, in breach of the CCCFA.

In 2013, a High Court ruling found the fees charged were unreasonable and in breach of the CCCFA.

Then, in 2014, the High Court released a further judgement clarifying the practices lenders should adopt when charging fees.

MTF and Sportzone appealed both decisions to the Court of Appeal which also found in favour of the Commerce Commission.

This week’s Supreme Court hearing is MTF’s last attempt at gaining a ruling in its favour.

However, Sanderson Weir director Jonathan Flaws said the Supreme Court won’t be able to do much more than tinker around the edges of the existing MTF judgements.

In his view, this will achieve nothing. 

Flaws said the High Court decision, which was upheld by the Court of Appeal, defined what is unreasonable when it comes to establishment fees and prepayment fees.

It also laid out a close and relevant test for establishment fees and set a general standard for “other fees”.

“Having the certainty of applying the methodology outlined by Justice Toogood is more constructive than trying to tweak the methodology to get an arguably better result for lenders in some areas only to find a worse result in others.”

A Commerce Commission spokesperson said they are not able to comment on the case while it is before the courts.

The Supreme Court’s hearing into the MTF case finishes today, but a decision in not expected for some time.

Tags: CFA Commission disputes fees finance companies financial advisers Responsible lending

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.75 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 ▼6.74 ▼6.49 ▼6.39
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 8 April 2024 9:21am

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