Pretty Penny quits NZ, writes off loans in Commerce Commission settlement
Wednesday, 8 July 2020
Payday lender Pretty Penny has quit New Zealand after reaching a settlement with the Commerce Commission.
Quadsaa Pty Limited (trading as Pretty Penny and PPL) will write off all outstanding loan balances in a settlement agreement with the commission.
The commission took the Australian-based company to court in 2019 for breaches of the principles of lender responsibility in the Credit Contracts and Consumer Finance Act (CCCFA).
The charges related to Pretty Penny's conduct between September 2016 and June 2017.
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Pretty Penny has also signed court-enforceable agreement 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 in Auckland in August 2019.
Commission chairwoman Anna Rawlings said Pretty Penny will no longer be able to do business in New Zealand.
“This agreement means outstanding balances owed to Pretty Penny should now no longer be payable,” she said.
In exchange for ceasing operations in New Zealand and wiping the debt of existing customers, the commission has agreed to discontinue its legal proceedings against Pretty Penny.
The proceedings filed with the court alleged that, between February 2017 and June 2019, 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 with interest compounding daily.
The commission alleged that Pretty Penny 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. The commission has provided guidance to lenders on the changes and we are actively monitoring compliance with them,” Rawlings said.
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.
The Credit Contracts Legislation Amendment Act, which passed into law in December, strengthened requirements to lend responsibly, especially in relation to how affordability and suitability tests were conducted.
The new law also limited the accumulation of interest and fees on high-cost loans, and provided new remedies and penalties for non-compliance.