Illegal lender charged
The Commerce Commission has filed criminal charges in Auckland District Court against an unregistered and uncertified lender.
It alleges Ilaisaane Malupo, trading as Nane Easy Loan Finance Services NZ, provided personal loans illegally to members of the Tongan community in south Auckland from March 2024.
Associate Commissioner Joseph Liava’a says when lenders are identified as operating outside of the law, the regulator will act swiftly to shut operations to ensure consumers are protected when borrowing money or buying goods on credit.
Under the Financial Service Providers (Registration and Dispute Resolution) Act and Credit Contracts and Consumer Finance Act (CCCFA), all lenders must be registered and certified to provide loans.
“Often these kinds of lenders are a last resort for people who are struggling to borrow from reputable lenders,” Liava’a says.
“Many people who borrowed from Malupo were already under financial pressure and on low incomes, so irresponsible lending could have had a big impact on borrowers and their families.
Some indicated they needed to borrow money to buy food or pay off other loans.”
Alongside the lack of certification, the commission alleges Malupo’s terms included high interest rates of up to 15 per cent charged on a weekly basis, which would double if borrowers failed to repay the loans within 28 days, and late-payment fees of up to $10 per day.
“In order to keep up with payments, some borrowers resorted to selling their sentimental possessions or missing rent payments,” adds Liava’a.
Malupo operated her business on social media. In some cases, she threatened that borrowers who failed to repay their debts would be “named and shamed” on Facebook or other sites until repayment was made.
“Public shaming is never okay and could put borrowers in a vulnerable position to avoid being called out for their friends and family to see,” Liava’a says.
The commission has prioritised enforcement action against lenders who fail to meet their obligations under the CCCFA. It is particularly focused on lenders who provide credit to vulnerable consumers in New Zealand.
Background to case
The commission launched an investigation into Malupo after receiving enquiries, including from a financial mentor, about her lending practices causing harm to borrowers.
While the regulator is continuing its investigation into further breaches of the CCCFA that are likely to have occurred, its immediate priority was to stop Malupo from entering new loans or enforcing any existing loans.
As of June 4, she had been charged under section 11 of the Financial Service Providers (Registration and Dispute Resolution) Act for providing a financial service without being registered. The penalty is 12 months’ imprisonment or a fine not exceeding $100,000.
In addition, criminal charges have been laid against her under section 103(2) of the Commerce Act for attempting to deceive or knowingly mislead the commission on any matter before it, the penalty of which is a fine not exceeding $100,000.
All lenders must be certified under part 5a of the CCCFA by the Commerce Commission. To gain certification, lenders must satisfy the regulatto that those operating the business are financially sound, honest, reputable, reliable and competent to do the job.
