Former high-cost lender Superloans warned: 19 loans to one borrower in just a year

A former high cost lender has been warned by the Commerce Commission. Photo / file

A former high-cost lender has been warned by the Commerce Commission over a likely failure to comply with its responsible lending obligations.

The commission has issued the warning to Superloans Napier and Superloans Porirua after it opened an investigation following a number of complaints from financial mentors which raised concerns about the group's compliance with the Credit Contracts and Consumer Finance Act 2003.

Commission chair Anna Rawlings said its 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."

The law requires lenders to make reasonable inquiries with a borrower to ensure the loan meets the borrower's requirements and objectives, and to exercise the care, diligence and skill of a responsible lender before entering into an agreement.

"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. These text messages did not contain a risk warning."

"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."

Rawlings said responsible lending was an area of focus for the commission.

"We urge lenders to make sure that they understand their responsible lending obligations and they have internal processes in place to ensure they meet those obligations," said Rawlings.