Auckland Council to refund $10 million to home insulation scheme customers after Commerce Commission warning

Auckland Council will refund $10 million worth of interest charges and rate penalties to over 20,000 borrowers in its Retrofit Your Home (RHY) Programme after a Commerce Commission investigation and warning.

Houses in Auckland (file picture). Source:

Ratepayers could join the RYH Programme from 2011 until 2020 and get financial assistance from Auckland Council to spend on insulation, heating, ventilation and/or energy efficiency measures.

Loans made through the RYH Programme are consumer credit contracts under the Credit Contracts and Consumer Finance Act (CCCF Act).

Auckland Council group treasurer John Bishop says council suspended new applications for the scheme and stopped charging interest to existing customers when it discovered errors in calculating the loan interest payments.

“We are now at the point where we can start issuing refunds to customers, due to the complexity of working through 20,500 customer accounts, we will be managing refunds in tranches over the next few months," Bishop said.

“Discovering the interest error and other issues with the scheme was clearly of concern to us and we took immediate steps to investigate and rectify the situation. An important step was self-reporting our oversights to the Commerce Commission. As a result, we have been issued with a warning letter by the Commission."

Bishop said the largest amount owed to a single customer was $3,000.

Auckland Council was warned by the Commerce Commission for potential breaches of the CCCF Act over the programme.

In the Commission’s view, Auckland Council failed to:

  • make reasonable inquiries before entering into an agreement with a borrower, so as to be satisfied that it is likely that the    borrower will make the payments under the agreement without suffering financial hardship
  • ensure that the key information was disclosed to every borrower before the contract is entered into;
  • ensure that it met its obligations in terms of continuing disclosure statements; and
  • ensure payments were credited as soon as practicable.  

Commerce Commission chair Anna Rawlings said Auckland Council’s failures to ensure it met its obligations under the law “went unchecked for a number of years”.

“This case demonstrates the importance of understanding the extent of your obligations. We urge anyone who is entering into arrangements for the sale of goods or services on deferred payment terms to get legal advice about whether they have to comply with the CCCF Act.”

Rawlings said the Commission had contacted Other Councils and Local Authorities to make them aware of the warning and to encourage them to take legal advice to ensure similar schemes are compliant.