An Australian high-cost short-term lender will stop lending to New Zealanders and has written off all outstanding loan balances following a settlement agreement with the Commerce Commission.
Quadsaa Pty Limited (trading as Pretty Penny and PPL) will write off the outstanding balances and refund the full cost of borrowing for the 21 people named in the Commission’s Statement of Claim filed against it.
“We filed proceedings against Pretty Penny because, in our view, it had breached a number of the responsible lending provisions of consumer credit law,” Commission chair Anna Rawlings said.
The Commission has agreed to discontinue its proceedings against Pretty Penny as it is no longer lending in New Zealand. The company had also agreed it would no longer advertise, invite or enter into consumer loans in New Zealand, and this is enforceable by law.
Pretty Penny also won’t provide any information about borrowers to third parties.
In August 2019, the Commerce Commission took Pretty Penny to the Auckland High Court.
The Commission alleged that Pretty Penny’s conduct between September 2016 and June 2017 breached their lending responsibilities under the Credit Contracts and Consumer Finance Act (CCCFA).
During that period, Pretty Penny offered loans of between $50 and $550 for terms of between one and 92 days with an annual interest rate of 365 per cent, or one per cent per day with interest compounding daily, the Commerce Commission said.
The Commission alleged Pretty Penny didn’t make sure borrowers had the ability to repay loans, didn’t exercise diligence in advertising, failed to make sure borrowers weren’t coerced into agreements and failed to ensure loan agreements weren’t oppressive.
From June 1, high-cost lenders’ interest and fees charged on a loan were capped at 100 per cent of the amount first advanced, with the rate of charge capped at 0.8 per cent daily.
The lenders were also restricted to making loans to certain repeat borrowers.
Under the CCCFA, lender responsibility principles required lenders to make sure the loans they were offering were suitable for borrowers’ needs, ensure that borrowers could repay them and were making an informed decision and that loans were ethical.