High cost lender Pretty Penny quits NZ, writes off loans in 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 where 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 Commission’s Statement of Claim against it, filed in the High Court ( 1.7 MB, PDF ) which explains these key restrictions. The specific rules are set out in the CCCF Act and the Credit Contracts and Consumer Finance Regulations 2004. These rules are complex, and lenders are encouraged to take legal advice to ensure that they operate within the restrictions.

Cost of borrowing

The cost of borrowing includes all applicable credit fees, default fees and all interest charges, including annual rates of interest, and default interest charges.

Lender Responsibility Principles

Lenders entering into consumer credit contracts on or after 6 June 2015 are required to comply with the lender responsibility principlesopen_in_new, as set out in the CCCF Act.
These include that lenders must make reasonable inquiries, before entering the agreement, to be satisfied it is likely the borrower will make repayments without suffering substantial hardship.

Responsible Lending Code

The Codeopen_in_new provides guidance as to how lenders can comply with the principles. It includes the type of enquiries a lender should make into a borrower’s income and expenses, and it specifies that more extensive enquiries should be made if the borrower is vulnerable.
The Code is not legally binding, but if lenders comply with it that will be treated as evidence they complied with the principles.