Monday 24th December 2012
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The Commerce Commission has cut a deal with Australian lender Bluestone Mortgages NZ over the fees charged on early repayments after a High Court ruling this year narrowed the regulator's scope to pursue a claim.
The regulator settled with Bluestone, Trustees Executors and TEA Custodians (Bluestone) over deferred establishment fees, which were charged when a client repaid a loan within the first four years, it said in a statement. The deal will see Bluestone refund $200,000 to 295 customers. The commission believed the fee breached the Credit Contracts and Consumer Finance Act, though the settlement means Bluestone doesn't admit any liability.
"The commission has settled this case following a decision of the High Court in August 2012 where Bluestone successfully argued that the commission was out of time to bring claims on behalf of a number of borrowers who had paid the deferred establishment fee," the regulator said.
In August, Judge Patricia Courtney turned down the competition regulator's application to extend the timeframe of its claim in the High Court on Auckland earlier this month, saying she had to strike a balance between the rights of borrowers and lenders.
The antitrust regulator was attempting to extend the timeframe of its initial claim between April 2005 and October 2006 by a further five years.
In 2010, Bluestone lost a bid to throw the regulator's case, with Justice John Priestley reluctant to strike out what would essentially be a test case of a certain part of the legislation.
The commission is finalising the method for calculating payments, and will contact borrowers next year. Borrowers who may be in line for a refund are those people who entered into a consumer credit contract with Bluestone between March 27, 2006 and Oct. 13, 2006, and were charged a fee after repaying their loan within the first four years.
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