Source: Auckland Council
Auckland Council’s Retrofit Your Home customers will soon be receiving refunds in relation to their Retrofit loan interest payments.
Auckland Council Group Treasurer John Bishop says the council suspended new applications for the Retrofit scheme, and stopped charging interest to existing customers, when it discovered errors in calculating the loan interest payments and has been working to remedy the situation.
Mr Bishop says that when looking into the interest error, the council also identified some potential issues relating to legislative and compliance requirements of the scheme.
“We are now at the point where we can start issuing refunds to customers,” says Mr Bishop. “Due to the complexity of working through 20,500 customer accounts, we will be managing refunds in tranches over the next few months.”
“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.
“While this is classed as a low-level response by the Commission, which has other enforcement tools such as injunctions and court proceedings, it is nonetheless significant, and we take it very seriously,” he says.
Alongside undertaking a full review of the scheme, staff have spent considerable time calculating refunds owed to customers who were overcharged interest on their loans.
Refunds will be made in stages, starting with existing ratepayers, then those ratepayers who have already paid off their loans.
“We estimate the interest refund payments will total around $9.7m. This amount has been provided for in the six-month accounts ending 31 December 2020. The council will also make sure any penalties are reimbursed,” says Mr Bishop.
“Refunds range in value. The largest amount owed to a customer is around $3,000,” he says.
No interest will be charged on these loans until 1 July 2021, at which time we will change the way we calculate the interest. This will result in customers paying less interest on their loan each year than was previously the case.
Discontinuation of the Retrofit programme
Following a full review of the complex legislative and compliance requirements of the Retrofit programme, and significant changes to financial and loan market legislation over recent years, the council has decided not to reopen the scheme to new applicants.
While this decision will not impact existing customers, it will be disappointing news to our suppliers and potential new customers. However, there are other healthy homes-related schemes and financing options available, including grants run by the Energy Efficiency & Conservation Authority (EECA) and district health boards, which target low income, at-risk owner-occupier households. Some banks also offer healthy homes-related financing options.
About Retrofit Your Home
The scheme offered ratepayers financial assistance of up to $5,000 for the installation of clean heat, insultation, water conservation, mechanical extraction and fireplace decommissioning.
The loan is repaid by a targeted rate on the property over a nine-year term.
To date, more than 23,700 Auckland homes have had work completed through the Retrofit programme.