# Regulatory Compliance Category > National Credit Act Forum > [Question] INITIATION FEE CAN BE PAID UPFRONT?

## Artvark

-
 NATIONAL CREDIT ACT, 2005
Fees or charges
102. (1) If a credit agreement is an instalment agreement, a mortgage agreement, a
secured loan or a lease, _the credit provider may include in the principal debt_ deferred
under the agreement any of the following items to the extent that they are applicable in
(a) _an initiation fee as contemplated in section 101(1)(6), if the consumer has
been offered and declined the option of paying that fee separately;_
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"Green Bank" has advised me that as my loan is an "unsecured personal loan", they did not have to advise me of the fact that the Initiation fee could have been paid upfront, instead of forcing me to include it in my loan amount and thus earning additional interest on that amount over the full loan term.

Is this true? It seems as If "Green Bank" is trying to bend the above credit Act to fit their purposes. Can anyone advise me legally if all banks MUST advise you of the option to pay the Initiation fee upfront? It seems to be the case if you read the Act, but  "Green Bank"  refuses to admit fault.

Granted the "Green Bank"  probably stand to loose millions in refunding all their clients that they have not given this option. But this is not my fault.

Can someone please give me their educated opinion ?

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## Dave A

> "Green Bank" has advised me that as my loan is an "unsecured personal loan", they did not have to advise me of the fact that the Initiation fee could have been paid upfront,


 :Hmmm:  The art of splitting hairs cuts both ways. I don't recall being offered the opportunity to pay the initiation fee seperately upfront on any of my recent asset finance deals. Not the "Green Bank" so not much aid to your cause, but I'm making a mental note to pay close attention on the next deal.

EDIT: Thinking about it, my deals are *financial* leases. Any bet that would be the excuse if I raised the issue?  :Stick Out Tongue:

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## Artvark

Interestingly they have subsequently told me that I can now pay this fee upfront with interest fees to be backdated and refunded etc. However they have stated catagorically that they are not in the wrong and they do not *have* to let me do this.

Ha - Ha ! That's funny. What is the last time the Bank refunded anything when legally they were not obliged to ?

 And Your finacial Lease agreements will be the same. as can be seen quoted here in the Credit Act :

"102. (1) If a credit agreement is an instalment agreement, a mortgage agreement, a
secured loan or a *lease*, the credit provider may include in the principal debt deferred
under the agreement any of the following items to the extent that they are applicable in
(a) an initiation fee as contemplated in section 101(1)(6), if the consumer has
been offered and declined the option of paying that fee separately;
"

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tec0 (30-Jul-10)

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## Dave A

> Interestingly they have subsequently told me that I can now pay this fee upfront with interest fees to be backdated and refunded etc. However they have stated catagorically that they are not in the wrong and they do not *have* to let me do this.
> 
> Ha - Ha ! That's funny. What is the last time the Bank refunded anything when legally they were not obliged to ?


Now now - Let's be gracious in victory. Doing the right thing needs to be encouraged  :Big Grin: 

Well done Green Bank  :Applaud: 
And well done Artvark  :Thumbup:

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## Artvark

Hi Dave

Yes, give credit where it is due, so thanks for the "Well done". However, it must be said that I fought for every inch and no thanks in the least is required for the Green Bank. This has taken over 3 months of time consuming emails etc.

The Credit Act is pretty clear about the initiation fee fact. I have had every excuse from the Green Bank including a lie that they did inform me of the fact that I could have paid this fee upfront “as their Personal Loan Advisors are trained to give me all this information.” etc.

At that stage I pointed out that their standard contract includes the fee and there is no way of adjusting or showing ones choice of paying it upfront etc. (I actually had to go inside a bank and pretend to be a new client to prove that they never ask their clients this.) The Green Bank has no ethics whatsoever has been my consistent experience. 

Hence my shameless and ungracious laughter. It may be beneath me, but I deserve it and it feels great !

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