finPOWER Connect Newsletter
The Commerce Commission has fined and banned indefinitely a 'Loan Shark' targeting the Chinese community.
Yuan Rong Yang, former owner of Sunway Finance Limited and money lender to Auckland's Chinese community for at least 17 years, has been fined $22,500.00 and banned from lending indefinitely in Auckland District Court.
Mr Yang had earlier pleaded guilty to two charges brought by the Commerce Commission, under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) relating to failing to provide key information to his customers about their loans.
In addition to his fine and ban, he has been ordered to pay $3,000.00 to the Complainant in this case and six other existing loan contracts have been quashed.
Commissioner Anna Rawlings said Mr Yang did not document the loans he made to borrowers and typically just had a verbal agreement with his customers, who were often contacts from within his community.
"Mr Yang operated his business without disclosing any basic information to borrowers, including his method for charging interest, the credit fees and charges, the amount of each repayment and total number of payments required. The law requires lenders to disclose this information, and more, to ensure that borrowers can properly understand the obligations they are committing to when taking out a loan."
Mr Yang's first charge relates to a customer who was a regular borrower. The complainant was never provided with any loan documentation or ongoing account statements. For each $1,000.00 borrowed, Mr Yang charged about $50.00 per week in interest, equating to an annual interest rate of around 260%. The complainant continued to borrow money and by May 2013 they owed Mr Yang $15,000.00 and around $870.00 per week in interest. After struggling to afford payments, the complainant stopped paying Mr Yang in February 2013.
When interviewed by the Commission, Mr Yang admitted personally loaning money to seven customers without providing any loan documentation to them. This formed the basis of his second charge.He also said he did not have any knowledge of the CCCFA or his obligations under it, nor his requirement to be registered under the Financial Services Providers Act 2008.
Ms Rawlings said the Commission was pleased to be able to work with the Chinese community to protect their interests as consumers, particularly because of the harm that these illegal lending practices can cause to individuals and families.
"The Commission is committed to taking action against lenders that are acting outside the law. Providing key information about a loan, known as disclosure, is a key feature of the CCCFA and one that all lenders should be very aware of. We are also committed to helping New Zealanders to be more aware of their rights when borrowing money."
Ms Rawlings encouraged anyone who was considering borrowing money to take a look at the Commission's 'Borrowing money or buying goods on credit: Know Your Rights' brochure, which is available in five languages.
"We also expect lenders to make sure that their lending practices are fully compliant with the CCCFA's updated lending requirements which came into force in June this year. These include amended disclosure requirements and new requirements for responsible lending," she said.