Calls for investigation of consumer credit sites
Media release from Ferratum New Zealand Limited
Calls for Commerce Commission to investigate consumer credit websites
Media Release: Ferratum New Zealand
14 February 2012 – For Immediate Release
Calls for Commerce Commission to investigate consumer credit websites
A recent EU-wide investigation into websites offering consumer credit found 70% of websites failed to provide the adequate information necessary for consumers to understand and compare credit offers is behind calls for a similar investigation in New Zealand.
“The findings of the EU sweep of over 500 websites offering consumer credit across 27 member states should sound alarm bells to the Government about similar risks existing here in New Zealand,” [http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/6&format=HTML&aged=0&language=EN&guiLanguage=en] says Richard Yoon, Ferratum New Zealand’s Director and Country Manager.
The investigation found that consumer credit websites did not meet the required level of disclosure, costs were presented in misleading ways and websites omitted information that would enable informed decision making by consumers.
“New Zealanders who are about to sign a contract for a personal loan, or other consumer credit should have confidence that loan providers are fully disclosing terms and conditions to applicants. In our view, they need to comply with the Credit Contracts and Consumer Finance Act in the small cash-loan market,” said Mr Yoon.
“We believe the Commerce Commission should launch an investigation into the level of information provided on websites for New Zealanders seeking consumer credit.
The EU’s investigation shows us that unless there are regular checks and enforcement action in New Zealand then it is increasingly likely that pop-up companies offering easy cash loans may fail to comply with the Act.
“A Commerce Commission investigation into third-tier lenders’ websites would provide confidence that New Zealanders are protected and importantly fully informed when seeking cash-loans,” Mr Yoon said.
[Ends]
Background Notes to
Editors:
• The EU investigation checked how businesses were applying the Consumer Credit Directive which aims to make it easier for consumers to understand and compare credit offers.
• Of the 562 websites checked, only 30% passed the test for compliance with the relevant EU consumer rules and 70% of these sites were flagged for further investigation.
• The advertising on 258 (46% of website checked) did not include all the standard information required by the Consumer Credit Directive.
• 244 (43%) websites did not give clear information about all the different elements of the total cost, e.g. of the type of interest rate (fixed, variable or both; the duration of the credit; and on some of the costs related to the credit (e.g. arrangement fees).
• 116 websites (20%) had potentially misleading presentaiton of the costs where the cost of the credit was displayed in a way which is false or could deceive consumers.
An “EU sweep” is an action co-ordinated by the European Commission and carried out simultaneously by the national consumer enforcement authorities in the member states.
This “EU sweep” was a joint EU investigation and enforcement action to check for compliance with consumer protection laws to see whether consumer rights are being compromised or denied.
National
enforcement authorities then follow up on these findings,
contacting the non-compliant companies demanding they come
into line with the relevant requirements, with legal action
against operators who violate EU consumer
law.