Superloans warned over 'likely' responsible lending breaches

Thursday, 3 December 2020

Superloans operations in Napier and Porirua have been formally warned by the Commerce Commission.

The Commerce Commission has issued a formal warning to Superloans Napier and Superloans Porirua telling the companies they were likely to have breached responsible lending principles.

The warning follows an investigation prompted by complaints from budgeting agencies, which help people struggling with debt to manage their finances better.

Commission chair, Anna Rawlings said: “Our investigation identified several borrowers who were provided with high-cost Express loans on a regular and ongoing basis.”

In one case a borrower had 19 loans in a 12-month period, she said.

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Superloans markets its loans using a muscled green superhero with a dollar symbol on his chest.

Superloans Napier’s website showed its Express Loans came with interest rates ranging from 29.9 per cent to 49.9 per cent per annum, but also had finance fees of $29 to $149, and administration fees of $3 to $12 per “pay period”.

Data from the Reserve Bank shows many households have been paying down their consumer debts.

But internet archives show in December last year, the interest rates on its Express Loans annualised to between 49 per cent and 149 per cent.

It’s the second warning letter sent to lenders this week by the Commerce Commission.

On Tuesday, the commission sent a warning letter on “likely” breaches of lending laws to BNZ, following an investigation prompted by the bank notifying the regulator of issues it had identified itself.

Rawlings said the Credit Contracts and Consumer Finance Act required lenders to make reasonable inquiries with a borrower to determine whether a loan met the borrower’s requirements and objectives.

“Our investigation found Superloans promoted and allowed its loans to be used on a regular and long-term basis and encouraged longer term and regular borrowing through the use of text and email messaging to borrowers,” she said.

These text messages did not contain a risk warning, she said.

“There was also limited evidence to indicate a borrowers’ previous borrowing or stated purpose for the loan was discussed or taken into account when assessing the suitability of the loan, and Superloans Groups’ guidelines did not contain any guidance on how staff should comply with their responsibilities in this area,” she said.

The Commerce Commission launched an investigation into Superloans in November 2018 after it received more than 20 complaints against the company since 2013, several from financial advisors.

At the time, Stuff reported some borrowers complained of interest rates of 300 per cent a year, and a $5 fee for every day a person was in default.

Superloans website says its Express Loans approval process can take as little as 15 minutes.

The Commerce Commission said a warning expressed its opinion that the conduct at issue was likely to have breached the law, but that only the courts could decide whether a breach of the law had occurred.

Warning letters were designed to prompt a change in recipients’ behaviour, the commission said.