Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


ComCom settles with Marac Finance following $500,000 payout

Media Release
Issued 25 February 2013
Release No. 62

Commission settles with Marac Finance following $500,000 payout

The Commerce Commission has settled with Marac Finance Limited following the finance company’s decision to refund 1,000 customers a total of about $567,000.

The refunds are to borrowers who paid their loans back early between 2006 and 2010 but were not refunded premiums for their loan repayment insurance.

The Credit Contracts and Consumer Finance Act (CCCF Act) requires that an appropriate portion of a premium is refunded to a customer when they repay their loan early. This reduces the final balance payable on the loan.

The Commission’s General Manager Competition Kate Morrison said, “The Commission’s view was that Marac was in breach of the CCCF Act and the Fair Trading Act. We saw a settlement as a timely and cost effective way of achieving the right result.”

“We are pleased that Marac has agreed to do the right thing by its customers and make these payments.”

The insurance premiums charged by Marac were paid at the start of each loan, on the basis that the loans would run for their full term. When Marac advised borrowers of the final balance to prepay the loan, Marac did not include the rebate on the insurance premium.

The Commission believed that as Marac arranged the insurance, and was therefore required to make the refunds, it breached the CCCF Act by not refunding as required. The Commission also believed that Marac was likely to have misled customers by telling them that insurance would be rebated, thereby potentially breaching the Fair Trading Act.

Marac was of the view that it did not arrange the insurance and was not in breach of the Fair Trading Act or CCCF Act. However, it agreed to make the refunds because its contracts said that it would refund insurance premiums when contracts were prepaid.

When the matter was brought to its attention in late 2010, Marac Finance immediately changed its practices to ensure that it rebates insurance premiums when a loan is prepaid. Since then, it has been working to identify and refund the affected borrowers.

Ms Morrison said it was particularly important when companies advise customers of a final balance that this balance is properly calculated.

“Borrowers rely on the information provided to them by lenders, and often have no way of ensuring that the balance owing is correct,” Ms Morrison said. “Borrowers should be aware that if a loan is being repaid early, insurance may be rebated, and they can ask the lender if there are any rebates due to them.”

A copy of the settlement with Marac Finance can be viewed at

The Commission has a number of fact sheets on the Credit Contracts and Consumer Finance Act:


Marac Finance Limited is a finance company providing vehicle finance to consumers and businesses through a dealer network. It is a subsidiary of Heartland Bank Limited.

Case study

Ms V purchased a car in March 2007. She entered into a two year financing contract with Marac, which included payment protection insurance with a premium of $1,270. Ms V repaid her loan in October 2007, 17 months early. The final balance advised to Ms V should have included a rebate of $649 for the insurance. As a result of the investigation, Ms V has since received a refund of $649.

The Credit Contracts and Consumer Finance Act 2003 regulates consumer lending, consumer leases and buy-back transactions, requiring the disclosure of certain information to consumers entering into consumer credit contracts and providing rules that relate to interest, payments and credit fees. You can find more information here

Under the Fair Trading Act 1986 it is an offence to make a false or misleading representation. You can find more information here:

© Scoop Media

Business Headlines | Sci-Tech Headlines


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news