Credit Contracts and Consumer Finance Act 2003

Consumer credit contracts - Fees - Unreasonable fees

44A: Default fees

You could also call this:

"What makes a default fee fair or unfair?"

Illustration for Credit Contracts and Consumer Finance Act 2003

When a court decides if a default fee is unfair, you need to think about if the fee is a fair payment to the creditor. The court looks at if the fee covers costs the creditor had, and a reasonable guess of losses due to what the debtor did or did not do. The court also considers what is normally done in business when deciding if the fee is fair. The court thinks about what is reasonable in business when deciding if the fee is a fair payment for costs and losses. You can find more information about this in the Credit Contracts and Consumer Finance Amendment Act 2014. The court uses this to work out if the fee is fair or not.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6502067.

This page was last updated on 1 January 2026 — View changes

Topics:

Money and consumer rights > Consumer protection

44: Credit fees other than establishment fees and prepayment fees, or

"Fees lenders charge you for services, excluding setup and early payment fees"

44B: Compliance with Code is evidence that fees are not unreasonable, or

"Following the rules helps prove your fees are fair."

Part 2Consumer credit contracts
Fees: Unreasonable fees

44ADefault fees

In determining whether a default fee is unreasonable, the court must have regard to, in relation to the matter giving rise to the fee, whether the fee reasonably compensates the creditor for the following:
any cost incurred by the creditor:
a reasonable estimate of any loss incurred by the creditor as a result of the debtor’s acts or omissions.

In determining whether the fee reasonably compensates the creditor for any cost and loss referred to in subsection (1), the court must have regard to reasonable standards of commercial practice.

Notes

Section 44A: inserted, on 6 June 2015, by section 31 of the Credit Contracts and Consumer Finance Amendment Act 2014 (2014 No 33).