Payday lender Moola has hit back at the decision by the Commerce Commission to take legal action against it, saying it believes its processes for assessing whether a loan is suitable are appropriate and it is confident it is a "best practice operator and socially responsible lender".

The Commerce Commission is taking NZ Fintech Limited, which trades as Moola, to the High Court and has alleged the company breached responsible lending practices under the Credit Contracts and Consumer Finance Act 2003.

Moola offers short term loans of up to $5000 via its websites and

The proceedings relate to the lender's conduct between June 2015 and November 2017 - a time during which Moola offered short-term loans with rates between 182.5 per cent and 547.5 per cent.


The commission alleges Moola failed to exercise the care, diligence and skill of a responsible lender as it failed to make inquiries to be satisfied with the borrowers' requirements and objectives, didn't find out if borrowers had the ability to repay the money without substantial hardship and didn't exercise care and diligence in text and email advertising.

It also alleges the company failed to treat borrowers reasonably and ethically when breaches of loan arrangements occurred, failed to ensure loan agreements were not oppressive, including interest rates, and failed to ensure it did not induce borrowers to enter into agreements by oppressive means.

The commission's investigation was prompted by a referral from a Christchurch budgeting advice service.

In a statement Moola said the commission had advised it that it was investigating a small number of complaints in 2017.

"Moola co-operated with the investigation and has worked closely with the Commerce Commission to understand its concerns, including concerns about Moola's assessment of a customer's ability to repay and the suitability of the loan to meet the customers' requirements."

The company said it strongly believes its processes for assessing a customer's ability to repay and loan suitability were appropriate for its products.

"The customer and Moola have a shared interest in the customer's ability to repay their loan.

"As the loan is unsecured with little to no recourse available to the lender, we have a strong interest in ensuring that the on-boarding process of new customers identifies and mitigates the risk of hardship."


Moola chief executive Guy Randall said its business practices continued to evolve but it was confident that it was a "best practice operator and socially responsible lender".

"Moola loans are for short term cash flow needs and are not suitable for every situation, we make this very clear.

"Moola has a strong focus on compliance and strives to be industry leading in this area. We don't always get it 100 per cent right. When we do make a mistake, we fix it."

Randall said it was "unfortunate" the Commerce Commission had decided to seek guidance from the court.

"However we will defend the claim and welcome any clarity about responsible lending practices that can ultimately be provided."

The commission is seeking borrowing cost refunds to 50 people and declarations that Moola's conduct breached the Act as well as a provision to stop Moola from new lending without taking steps to ensure it has met legal obligations.


The commission would not make further comments as it was now before the court.

The law changed in 2015 which meant lenders were required to comply with responsible lending principles.

These principles specify that lenders must make reasonable inquiries, before entering the agreement, to be satisfied it is likely the borrower will make repayments without suffering substantial hardship.

A responsible lending code was also set up by the industry to help provide guidance on how lending and comply with the principles.

The code is not legally binding but if lenders comply with it that will be treated as evidence they complied with the principles.

Companies office records show Ltd is jointly owned by Taurus Investments and EJ Recordon Holdings and its directors are Steve Brooks and Edward Recordon.


Brooks garnered public attention last month for taking out a newspaper advertisement trumpeting outgoing Air New Zealand chief executive Christopher Luxon as the next leader of the National Party.