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The Never Ending Loan

Vicky takes out a loan

In January 2015, Vicky took out a $175 loan with Breezy Loans. She chose to repay it at $55 a week for 8 weeks, which would total $440.

 Vicky soon noticed that whenever she missed a payment, she was charged a $49 ‘bank dishonour’ fee and a $30 (sometimes higher) ‘letter fee’. After she had made six repayments ($330), the loan balance was at $590, due to the accumulation of these fees. It seemed she would never be able to repay the loan. Vicky came to FSCL because she thought this wasn’t fair.


FSCL investigation

We began by asking Breezy Loans for a report on the complaint. Even with consistent prompting, Breezy Loans did not respond for about six weeks due to a system error and company restructure.



Because of the unnecessary delay, Breezy Loans offered to cancel the contract and discharge Vicky from the remaining debt. Vicky accepted this offer.


The lesson

If we had conducted a full investigation, we might have looked into the reasonableness of the fees Breezy Loans charged. The reasonableness of fees charged by lenders is currently an issue the Supreme Court is assessing in Sportzone Motorcyles Limited and Motor Trade Finances Limited v Commerce Commission [2015] NZCA 78.

Another issue we may have looked at is whether Breezy Loans complied with the responsible lending principles in the Credit Contracts and Consumer Finance Act 2003 and the Responsible Lending Code, which require lenders to make sure borrowers are well informed about the agreement and its implications before the borrower agrees to enter into it. It is important that lenders are aware of the Principles and the Code so that they lend responsibly.