Bluestone fails to stop ComCom legal action
The fee, called a "deferred establishment fee" was a contractual mechanism adopted by Bluestone to cover the costs of early repayment of mortgages. This fee was up to 4% of the value of the mortgage if it was repaid before up to four years.
The Commerce Commission views the fee as unreasonable and in breach of the Credit Contracts and Consumer Finance Act 2003. It says the amount of the fee was more than the early repayment of a mortgage would cost Bluestone. It is treating this as a test case.
Bluestone claims it did not break even on loans on a cashflow basis until they had been in force for about 40 months and therefore the fees it charged couldn't be said to be gouging borrowers or generating excessive profits.
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