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Challenging an unfair credit contract through the courts

What can I do if the contract is unfair?

Credit Contracts and Consumer Finance Act 2003, ss 117–131

You can ask the Disputes Tribunal or the District Court to change the terms of a credit contract if you think it’s very unfair (the CCCF Act calls this “reopening” the contract). The terms can be changed if:

  • the contract is “oppressive,” which means it’s “harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice,” or
  • the lender is exercising a right they have under the contract in an oppressive way – this includes, for example, refusing to change the terms of the contract or to agree to an early termination, or
  • the lender persuaded you to enter into the contract by acting in an oppressive way.

There are certain factors that the Tribunal or the court has to consider, including:

  • the relative bargaining power of the two sides
  • whether your age or your physical or mental condition meant you weren’t reasonably able to protect your own interests
  • whether the lender complied with the lender responsibility principles (see: “Responsible lending requirements”)
  • whether the contract is written in clear, understandable language
  • the terms you could have obtained from other lenders
  • how much you have to pay under the contract
  • how long you were given to put right any default.

Usually, the court or Tribunal won’t change a contract just because, for example, a penalty interest rate is high. They will tend not to change your contract if you’re experienced and you clearly understood the contract. They’re more likely to change your contract if your understanding was limited in some way – for example, by not being able to speak or read English or by some disability.

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Credit and debt

Where to go for more support

Legal information and support groups

Community Law

Your local Community Law Centre can provide you with free initial legal advice.

Find your local Community Law Centre online: www.communitylaw.org.nz/our-law-centres

Consumer Protection

The Consumer Protection website has useful information on a range of consumer topics. Consumer Protection is part of the Ministry of Business, Innovation, and Employment (MBIE).

Website: www.consumerprotection.govt.nz
Email: cpinfo@mbie.govt.nz
Phone: 0508 426 678 (0508 4 CONSUMER)

Consumer NZ

The Consumer NZ website provides a wide range of information on consumer issues and template letters you can use to write to traders to enforce your rights.

Website: www.consumer.org.nz
Email: info@consumer.org.nz
Phone: 0800 226 786 (0800 CONSUMER)

Commerce Commission

The Commerce Commission enforces the laws against misleading and deceptive conduct by traders (the Fair Trading Act) and the consumer credit legislation (the Credit Contracts and Consumer Finance Act). The Commission provides information on these areas on its website.

Website: www.comcom.govt.nz
Email: contact@comcom.govt.nz
Phone: 0800 943 600

To make a complaint online: comcom.govt.nz/make-a-complaint

To read consumer rights in different languages: comcom.govt.nz/consumers/read-about-your-consumer-rights-and-business-responsibilities-in-another-language

Citizens Advice Bureau (CAB)

CAB provides free, confidential and independent information and advice. See CAB’s website for valuable information on a range of topics.

Website: www.cab.org.nz
Phone: 0800 367 222
Facebook: www.facebook.com/citizensadvicenz

Find your local CAB office: www.cab.org.nz/find-a-cab

FinCap and Money Talks

FinCap is a non-government organisation providing free financial mentoring services.

Website: www.fincap.org.nz
Email: kiaora@fincap.org.nz
Phone: 04 471 1420

MoneyTalks is a financial capability helpline operated by FinCap. The Financial Mentors offer free, confidential advice by phone, text, email and live chat.

Email: help@moneytalks.co.nz
Phone: 0800 345 123
Text: 4029
Live chat: www.moneytalks.co.nz

Insolvency and Trustee Service (ITS)

The ITS deals with bankruptcies, no-asset procedures, summary instalment orders and some company liquidations. Information about those processes is available on its website. The ITS is part of the Ministry of Business, Innovation and Employment (MBIE).

Website: www.insolvency.govt.nz
Phone: 0508 INSOLVENCY (0508 467 658)

Dispute Resolution Schemes

There are four dispute resolution schemes for consumers dealing with lenders and other credit providers. Contact the scheme your service provider has registered with.

1. Financial Services Complaints

Website: fscl.org.nz
Phone: 0800 347 257

2. Insurance & Financial Services Ombudsman

Website: www.ifso.nz
Phone: 0800 888 202

3. Banking Ombudsman

Website: www.bankomb.org.nz
Phone: 0800 805 950

4. Financial Dispute Resolution Service

Website: www.fdrs.org.nz
Phone: 0508 337 337

Credit Reporting

Your credit record

There are three credit reporting companies that operate nationally in New Zealand. To check your record or correct any information, you’ll need to contact them all.

You’re entitled to a free copy of your credit record. You should make sure you choose the free option when you contact each company.

1. Centrix – www.centrix.co.nz – 0800 236 874
2. Illion – www.illion.co.nz – 0800 733 707
3. Equifax – www.equifax.co.nz – 0800 698 332

Personal Properties Securities Register (PPSR)

Search the PPSR register to see if there is any security interest registered against a vehicle. This can be done for a small fee by registering to check online.

Website: www.ppsr.companiesoffice.govt.nz

Privacy Commissioner

The Privacy Commissioner has information on your rights in relation to credit reporting and how to complain if you feel your rights have been breached.

Website: www.privacy.org.nz
Email: enquiries@privacy.org.nz
Phone: 0800 803 909

To make a complaint online: go to the website above and select “Your rights tab” then “Complaining to the Privacy Commissioner”

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