Wronged borrowers repaid $88k

High-cost lender Ferratum New Zealand has repaid $88,173 to borrowers after breaching responsible lending rules.

The lender, which also traded under the brands Just Cash and Simple Cash, admitted breaching the responsible lending provisions of the Credit Contracts and Consumer Finance Act 2003 (CCCF Act), the Commerce Commission said.

In a settlement with the commission, Ferratum, which is owned by Finnish company Ferratum Oyj, repaid the cost of borrowing for 46 borrowers.

Ferratum loaned amounts between $100 and $1000 to borrowers, charging interest between 52 and 803 per cent per annum, the commission found in an investigation dating back to 2018.

The loans were offered on terms of seven to 45 days.

‘‘The lender responsibility principles require all lenders to exercise the care, diligence and skill of a responsible lender in their dealings with borrowers and guarantors, and to comply with the specific responsibilities set out in the CCCF Act,’’ said commission chair Anna Rawlings. ‘‘Ferratum has admitted it did not live up to its responsibilities.’’

Between June 2015 and October 2018, Ferratum failed to make reasonable inquiries as to those borrowers’ requirements and objectives, failed to exercise reasonable care in advertising loans, and failed to assist borrowers to reach informed decisions as to whether or not to enter into loans, she said.

‘‘Though Ferratum has told us that it is not currently issuing new lending here, it has also signed court-enforceable undertakings regarding aspects of its lending and advertising practices,’’ Rawlings said.

‘‘Should it start lending here again, it has undertaken not to advertise high-cost loans without including a prominent statement that such loans should not be used for long-term or regular borrowing, and are only suitable for short-term cash needs.’’

It had also promised not to send messages directly to borrowers, without regard to their financial position, requirements, or objectives, which encouraged them to take out another highcost loan with Ferratum.

The commission found it sent marketing messages directly to people who had unpaid loans with it, or who had recently repaid their loans. Marketing messages were also sent directly to people who had failed to make repayments on Ferratum loans in the previous six months.

‘‘We note that recent changes to the CCCF Act make it unlawful to lend to a borrower who already has, or has recently had, high-cost loans with other lenders,’’ Rawlings said.