Regulator stops action on lender
Australian high-cost and short-term lender Quadsaa Pty Ltd, trading as Pretty Penny and PPL, has undertaken to write off all outstanding loan balances in a settlement agreement with the Commerce Commission.
After indicating that Pretty Penny is no longer lending in New Zealand, it has also signed court-enforceable undertakings that it will no longer advertise for, invite or enter into consumer loans in New Zealand, and it will not provide any information about borrowers to third parties – except when required by law.
In addition to writing off all outstanding loan balances at the time of its removal from the Companies Register, Pretty Penny will refund the full cost of borrowing to 21 borrowers named in the regulator’s statement of claim against it, which was filed in August 2019.
Anna Rawlings, who chairs the commission, says: “We filed proceedings against Pretty Penny because, in our view, it had breached a number of the responsible lending provisions of consumer credit law.
“That conduct has now ceased because it will no longer do business here in New Zealand and this agreement means outstanding balances owed to Pretty Penny should now no longer be payable.”
The commission has agreed to discontinue its proceedings against the company. The proceedings alleged that, between February 2017 and June 2019, it breached the lender responsibility principles of the Credit Contracts and Consumer Finance Act (CCCFA).
In 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 daily – with interest compounding daily.
The commission alleged the company failed to exercise the care, diligence and skill of a responsible lender as required by the lender-responsibility principles, including that it failed to ensure its loan agreements were not oppressive.
“Recent changes in consumer credit law capped interest and fees charged on a high-cost loan at 100 per cent of the amount first advanced, and have brought in other protections for borrowers,” adds Rawlings. “The commission has provided guidance to lenders on the changes and we are actively monitoring compliance with them.”
