Commerce Commission takes Pretty Penny to the High Court over its lending practices

Monday, 12 August 2019

The Commerce Commission is taking short-term loan company Pretty Penny to the Auckland High Court.

The commission alleged Quadsaa Pty Ltd, trading as Pretty Penny and PPL, breached the principles of lender responsibility in the Credit Contracts and Consumer Finance Act (CCCFA).

The proceedings relate to Pretty Penny's conduct between September 2016 and June 2017.

According to the commission, Pretty Penny failed to ensure borrowers' ability to repay loans, failed to exercise diligence in advertising, failed to ensure loan agreements were not oppressive and failed to ensure that borrowers weren't coerced into agreements.

* Finance companies fined $103,500 for using fridges, beds as security in loan contracts

Pretty Penny Loans, also known as PPL, is being taken to court by the Commerce Commission.

* Auto Finance Direct and Pacific Loans agree to refund $600,000 in excessive and unfair lending fees

* Commerce Commission launches another broadside at loan sharks to enforce controls**

Pretty Penny offered loans of between $50 and $550 for terms of between 1 and 92 days with an annual interest rate of 365 per cent, or 1 per cent per day.

The commission was seeking a guilty verdict and an injunction to prevent the company from doing business until it could show it was able to met the act's standards.

The commission had received 76 complaints or inquiries about Pretty Penny since March 2017.

Pretty Penny has been contacted for comment.

This is not the first time Pretty Penny has been criticised for its lending practices.

In 2016, Mediaworks pulled the company's advertisements from its radio stations after public pressure.

Since 2015, lenders have been required to comply with the lender responsibility principles set out in the CCCFA.

That meant that lenders had to make sure the loans they were offering were right for the borrower's needs and that they could repay them, that the borrower was making an informed decision and the loan was being made ethically.

In June 2018, the commission launched a lender website review, which looked at the websites of 215 lenders to determine if they were likely to be complying with their responsibilities under the CCCFA.

It showed annual interest rates of up to 803 per cent and more than 500 different named fees.

Commerce and Consumer Affairs Minister Kris Faafoi has introduced the Credit Contracts Legislation Amendment Bill to address loopholes in the 2015 law.

The bill is currently in sitting in Select Committee.