Finance company refunds $788,000 to jobless borrowers
Published May 27th, 2007
An Auckland finance company has refunded $788,000 to unemployed borrowers in an out-of-court settlement with the Commerce Commission.
More than 1500 unemployed borrowers who bought cars mostly from Great Wall Motors in Otahuhu were required to insure their Club Finance car loans against the risk of redundancy despite being jobless.
The Commerce Commission said a clause in the contract meant that even if the borrowers got a job after taking out the loan and were then made redundant they would not be eligible for any benefit.
Deborah Battell, director of fair trading at the commission, said the Credit Contracts and Consumer Finance Act explicitly stated that borrowers could not be required to take out unnecessary insurance.
“It is hard to think of anything more unnecessary than this kind of redundancy insurance for the unemployed.
“Club Finance and their agents should not have told their unemployed customers to take out this insurance when there was no possible way they could benefit from it.”
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