Retirement villages urged to check credit law compliance

Media release

Issued 21 November 2016
Release no. 53

Retirement villages urged to check their credit law compliance

The Commerce Commission is reminding retirement villages to ensure their consumer credit contracts and lending practices comply with the law.

Some retirement villages offer credit to residents to assist them to enter their village or to acquire goods once they are living there. All businesses that offer credit to consumers are required to meet certain obligations under the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

Commissioner Anna Rawlings said that it is important that retirement village residents get all the information they need when they take out a loan or buy goods on credit.

“The CCCFA is designed to protect borrowers’ rights and this law was strengthened last year. The retirement village industry needs to ensure villages are following these important lending requirements when offering credit to their residents,” she said.

Ms Rawlings said that the Commission was recently pleased that Bupa Retirement Villages Limited (Bupa) voluntarily reported possible non-compliance to the Commission. Bupa realised it had not disclosed all the necessary information when offering loans for heat pumps and loans to assist residents to enter its retirement villages.

“Bupa corrected its disclosure and is in the process of compensating affected debtors. We issued compliance advice to the company in this instance and acknowledged the remedial steps it had taken, and continues to take, and its proactive approach to alerting us to the issue,” she said.

Background

In May this year the Commission reminded lenders that failing to disclose the required information to borrowers about their credit contracts could result in the repayment of all fees and interest. You can read more here.

Bupa determined that it had not disclosed all the necessary information to affected residents as required under the Credit Contracts Act 1981 and CCCFA.

Around 100 residents at the Bupa Retirement Village entered into a heat pump loan or a loan assisting them to enter into an Occupational Rights Agreement. An Occupational Rights Agreement gave the residents the right to occupy a unit in the residential village. Under the relevant loan, the resident borrowed the amount needed to be granted those occupation rights.

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