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Credit Contracts and Consumer Finance Act 2003

Consumer credit contracts - Provisions relating to debtors under high-cost consumer credit contracts - Rules

45J: Default fees

You could also call this:

"What are default fees and how much can you be charged?"

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You have a high-cost consumer credit contract. This section applies to you for sections 41, 41A, and 44A. You need to know about default fees. If a creditor charges you a default fee that is more than the prescribed amount, the fee is presumed to be unreasonable. The creditor must prove the fee is reasonable. They must show it was reasonable to take the action that incurred the cost. The Governor-General can make regulations about the prescribed amount. If no regulations have been made, the prescribed amount is $30. You can find more information about regulations in Part 3 of the Legislation Act 2019. Regulations are secondary legislation, which you can read about by following the link to the Legislation Act 2019 https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7298343

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS347744.

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Topics:
Money and consumer rights > Consumer protection
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Part 2Consumer credit contracts
Provisions relating to debtors under high-cost consumer credit contracts: Rules

45JDefault fees

  1. This section applies, for the purposes of sections 41, 41A, and 44A and this subpart, in respect of a high-cost consumer credit contract.

  2. Subsection (3) applies if—

  3. the contract provides for a default fee that is more than the prescribed amount; or
    1. the creditor accepts a payment, or debits a fee or charge to the debtor’s account, in respect of a default fee that, taken together with any previous default fees charged under the contract or any related consumer credit contract (within the meaning of section 45E) is more than the prescribed amount.

      1. The fee must be presumed to be unreasonable, and to be in breach of this section and section 41, unless the creditor rebuts the presumption by proving, on the balance of probabilities, that the fee is reasonable.

      2. The requirement to rebut in subsection (3) includes proving the things in section 44A, including that it was reasonable to take the action that incurred the cost to which the fee relates (for example, sending the default to a debt collection agency).

      3. The Governor-General may, by Order in Council, make regulations prescribing the amount for the purpose of this section.

      4. The power in subsection (5) to make regulations may be used only on the recommendation of the Minister, and the Minister may make a recommendation only if the Minister—

      5. has had regard to the purpose of this subpart; and
        1. has consulted the Commission and the persons or representatives of the persons who the Minister considers will be substantially affected by the regulations.

          1. If no regulations have been made, the prescribed amount is $30.

          2. Regulations under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

          Notes
          • Section 45J: inserted, on , by section 25 of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).
          • Section 45J(8): inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).