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Ensure full disclosure - ComCom

Failure to disclose all the required information to mortgage borrowers could cost lenders, the Commerce Commission has warned.

Thursday, May 5th 2016, 3:30PM

by Miriam Bell

Changes made to New Zealand’s credit laws last year mean all lenders must disclose key information to all borrowers.

Such information includes the term of the loan, total amount, interest, fees, any security taken and the effect of that security, and the borrower’s right to apply for relief on grounds of unforeseen hardship.

Failure to disclose this information could mean lenders have to repay affected borrowers the fees and interest on their loans which accrued during the non-disclosure period.

This could result in significant costs for a lender. Further, lenders who don’t comply could face criminal enforcement action and fines of up to $600,000.

A Commerce Commission spokesperson said the warning was prompted by the Commission’s involvement in several recent cases where lenders had not adequately disclosed key information to borrowers.

One such case was that of payday lender Cash in a Flash which was ordered to refund customers $122,365 last month, after the Commission warned it was likely to have breached consumer credit laws.

Commissioner Anna Rawlings said the warning applied to lenders of all sizes and types, from small payday lenders through to the major banks.

“The responsibility to ensure contracts comply with the law rests squarely with those lenders. It is essential they ensure their disclosure documents have been reviewed and they are satisfied the documents contain all of the relevant key information required.”

However, ilender broker Jeff Royle told mortgagerates.co.nz that the mortgage lending sector tends to meet those obligations.

“I’m not aware of any mortgage lender, bank or non-bank, which would fail to disclose that type of information to borrowers.

“In fact, second-tier mortgage lenders tend to disclose as much information as possible to borrowers.”

Conversely, a common issue is that a vast amount of borrowers don’t read the information in the contracts they are given as comprehensively as they should, he said.

For example, borrowers often complain about clawback provisions when they repay loans early – and yet clawback provisions are fully disclosed in their mortgage agreement.

“It pays for brokers to really emphasise key information to borrowers they are assisting.”

Royle said it would be interesting to see whether the Financial Management Authority recommended disclosure of further information in its upcoming review of the industry.

Tags: banks Disclosure FMA Lending mortgages

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 4.29 5.09 5.35
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 5.14 ▼5.79 6.15
TSB Special 4.79 4.34 ▼4.99 5.35
Unity 5.65 4.80 5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 19 May 2022 10:42am

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