Moola admits not behaving like a responsible lender
Moola online lender will reimburse fees and interest paid by 50 borrowers. Photo / File
Online lender Moola agreed to repay interest and fees paid by 50 borrowers after admitting that it had failed to act as a responsible lender.
The Christchurch-based company reached a settlement agreement with the Trade Commission after failing to adhere to the responsible lending principles of the Credit Agreements and Consumer Credit Act.
The loans were made to borrowers between June 6, 2015 and November 30, 2017. During this period, Moola provided high cost short and medium term loans with annualized interest rates of up to 547.5 %.
According to the Commission, Moola failed to carry out reasonable investigations to ensure that the loans met the borrowers’ requirements and that the borrowers were able to make repayments without suffering financial hardship.
Borrowers had to choose from a limited list of options when indicating the reason for the loan and if they chose “other” it was not possible to provide additional information.
Moola also did not ask for any additional information, which means the company did not consider the purpose of the loan when deciding to approve it.
Some borrowers who wished to supplement their loan were not required to indicate the purpose at all.
The commission also found that Moola relied on income ratios to assess affordability rather than assessments of the borrower’s actual expenses relative to their income. Borrowers were not asked to specify actual expenses and additional checks were not carried out.
On top of that, Moola admitted that she failed to exercise the care, diligence and skill of a responsible lender in advertisements for high cost loans when she engaged in a direct advertising offering additional loans, and that its methods of contacting delinquent borrowers violated its obligations. treat borrowers in a reasonable and ethical manner.
Trade Commission chairwoman Anna Rawlings said Moola had failed in her responsibilities to ensure that loans met borrowers’ needs and could be repaid without substantial hardship.
“These are important protections for borrowers and Moola is committed to implementing systems, processes, policies and training to help it meet its responsible lending obligations in the future.”
The Herald sought comment from Moola’s parent company, NZ Fintech Group Holdings. NZ Fintech is also raising up to $ 30 million to expand into vehicle finance through the Zooma brand.
This is the second settlement agreement Moola has reached with the Trade Commission this year.
In March, Moola agreed to repay around $ 2.8 million to current and former borrowers after a Trade Commission investigation into credit and default charges.
Moola agreed to the settlement with the commission, acknowledging the watchdog’s view that he charged unreasonable credit and default fees between February 2016 and July 2017.
From December, new regulations will require lenders to conduct additional and specific surveys of borrowers’ needs and goals, as well as their income and expenses, to ensure loans are suitable and affordable.
Rawlings said he urged all lenders to familiarize themselves with these requirements and to ensure that they have processes in place to help them comply.