High-charging non-bank lenders revealed
Non-bank lenders General Finance, Southern Cross Partners, and Wroxton Finance were singled out by a Commerce Commission report last month for displaying large “establishment fees” on their websites.
Thursday, July 19th 2018, 10:43AM
by Dan Dunkley
In June, the Commission released a report on the transparency of non-bank lenders’ websites.
The report referred to three “niche mortgage market” lenders, that displayed “establishment fees” of more than $1000 on their websites.
The three lenders were unnamed in the report. However, the Commission has responded to an Official Information Act request from TMM.
The Commerce Commission said General Finance was the lender mentioned in the report that displayed an “establishment fee” of $2,000 to $5,000, depending on the amount borrowed.
The Commerce Commission confirmed Southern Cross was referred to as a lender that displayed a “loan application fee” of $1,900.
Meanwhile, the Commission said Christchurch based mortgage lender Wroxton Finance Limited was the lender that displayed “a range of establishment fees between $500 and $2,000 depending on the loan amount borrowed”.
There is no suggestion the lenders committed or were accused of any wrongdoing or regulatory non-compliance. The Commerce Commission looked at “establishment fees” due to their wide variation in cost and description. The Commission said the “median establishment fee” was $275, with just 10% of lenders charging more than $500.
Southern Cross’s Luke Jackson said: “Regarding the establishment fee published by Southern Cross Partners, it was calculated by closely following the guidelines published by the Commerce Commission. I would expect this fee to be higher than most of the other lenders surveyed as non-bank mortgage lending, to a borrower who cannot obtain bank funding, requires more time to be spent in establishing the loan.”
Brent King of General Finance said General Finance prided itself on its record of compliance with laws rule sand guidance applicable to its business.
He said it had never been advised of any breach of any regulatory requirement. “Our fees are set based on actual costs which are reviewed periodically.”
Wroxton did not respond to a request for comment.
The Commission’s report reviewed the websites of 215 non-bank lenders between May and December last year. The review included a range of consumer-facing lenders, from high-interest payday lenders to mortgage providers. A separate review of banks’ websites is being conducted.
At the time of the report’s release, Commissioner Anna Rawlings said she had contacted each of the 215 non-bank lenders reviewed to “remind them of their responsibilities”. She added: “While most lenders have shown a willingness to make changes, we will be checking back later in the year and will consider further action if they have failed to comply.”
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