I'm a good guy, says text loan seller

Richard Yoon says his company, Ferratum, knows how to choose good customers. Photo / Sarah Ivey

Richard Yoon is peddling quick cash loans - but insists he is one of the good guys.

Mr Yoon is the director and country manager for Ferratum, a Finland-based loan company that came under fire this week for offering loans via text message.

Yesterday the Commerce Commission told him his company would be investigated after it was revealed Ferratum was offering cash loans up to $600 and then demanding repayments with interest rates above 60 per cent.

"We are very happy with that [investigation]," Mr Yoon said.

"People have been absolutely and totally misguided about Ferratum. Legally, what we are doing is fine, but ethically - I don't know."

His comments came as the Government hinted at a code of conduct and licensing system for loan companies such Mr Yoon's. Labour promised to cap lending interest rates.

Commerce Minister Simon Power said he was convening a summit of the sector in August, saying it was time to make changes in consumer credit.

"There are many credit companies that are transparent and responsible and open. But there are others that aren't and I'm signalling to that second group today that their days are numbered," he told the Financial Literacy Summit in Wellington.

"There are gaps in the system that allow the unscrupulous to take advantage of the unwary when it comes to access to consumer finance in these tough economic times."

It was too easy for the unwary to agree to something they didn't fully understand and become trapped beyond their means. "We need to do something about that and we will."

Labour leader Phil Goff said the summit would not go far enough and a law capping interest rates was needed.

"We don't want summits. We don't want talk-fests. We want a piece of legislation that sets a maximum rate so that loan sharks have to lend below that level, and legislation that says they can't lend knowing that people can't afford to repay."

Mr Yoon said only existing customers with a proven good credit record could access loans by text message, using a personal PIN code.

By 3pm yesterday, 57 people had applied for Ferratum loans but only 10 had been approved.

"We only want good customers. We are very careful when we choose our customers," he said. "We are really the good guys. Only 23 per cent of loan applications are approved."

He said customers were chosen once all their personal details were verified and it had been established they had not defaulted on any repayments in the past, or had loans outstanding.

No customers had defaulted on a payment in the one month the company had been operating.

He denied the high interest rate on his loans was dangerous to customers signing up for loans in desperate times.

"We know how to choose good customers. The market decides the price and if other companies drop their price, then we'll drop below that."

Mr Yoon said he was a businessman offering unsecured, short-term loans - and the interest rate had to reflect that.

"How can we make a profit if not? It's clever ... I'm so happy."