The Commerce Commission is to prosecute a south Auckland credit provider and has warned six others for allegedly failing to provide important information to customers taking out personal loans.
The commission said six credit providers that had been warned were: Mana'ia Financial Services, Sala Multi Services Ltd, Winston's
Finance, Houmatetefa Finance, Mizpah Trading Co Ltd, and Funaki Enterprises.
The commission said it would not comment further on the prosecution of the seventh credit provider at this stage.
The credit providers predominantly target Pacific Island consumers by advertising in Pacific language newspapers.
They provide short-term cash loans, usually of relatively small amounts.
Traditional Tongan mats are often used as security for the loans.
The commission found that the six warned credit providers allegedly failed to:
* advise customers of their statutory right to cancel the loan within a certain period of time;
* disclose the annual interest rate and the amount of interest payable;
* advise customers of the costs of full repayment;
* describe adequately property subject to security interests.
Adequate disclosure is required under the Credit Contracts and Consumer Finance Act (CCCF Act).
Fair trading manager Graham Gill said: "It gives consumers the ability to make informed choices about the true cost of credit, to compare competing credit offers and be aware of both their rights and obligations under the contract."
He said it was essential consumers understood what they were committing to when entering any credit contract.
"Which is why the disclosure requirements are written into the legislation."
- NZPA
