$200k penalty for 182.5% rates
Eagle M.A.N Group, trading as Eagle MAN, has been fined $200,000 by the Christchurch High Court for issuing high-interest loans that violated multiple provisions of the Credit Contracts and Consumer Finance Act (CCCFA), the Commerce Commission reported.
The case, brought by the Commerce Commission, marks the first enforcement of rules specifically targeting high-cost lenders.
Loans pushed vulnerable borrowers into debt
Commerce Commission deputy chair Anne Callinan (pictured above) highlighted the importance of this case in protecting consumers, noting that high-cost loans can have serious financial consequences.
“Loans that have an interest rate of over 50%, and in Eagle MAN’s case over 100%, can push consumers into debt spirals that are very difficult to get out of and cause a lot of harm to consumers and their families,” Callinan said.
Eagle MAN’s loans, which reached interest rates as high as 182.5%, were largely issued to financially vulnerable borrowers, including recent immigrants and temporary visa holders who may have had limited financial resources and were more susceptible to financial hardship.
Non-compliance with high-cost lending regulations
Under the CCCFA, lenders charging more than 50% interest on loans are classified as high-cost lenders and must meet strict requirements.
Eagle MAN, however, failed to comply with these regulations. The company charged excessive interest and fees, issued repeat high-cost loans, and did not disclose essential loan information to borrowers.
Callinan stressed the need for lenders to have robust compliance processes to ensure borrowers are treated fairly, especially when dealing with vulnerable consumers who may lack other options.
Court ruling highlights systemic breaches
The Christchurch High Court found that Eagle MAN likely breached the CCCFA across its loan portfolio from May 2020 to August 2022.
The Commerce Commission’s investigation of a sample of high-cost loans revealed that more than half contained violations of the act.
“This court ruling is significant as it shows these breaches were systemic and the penalty reflects the overarching scope and scale of the high-cost loan breaches – 59% of consumers faced breaches, which is unacceptable,” Callinan said.
Setting a precedent for high-cost lenders
The ruling serves as a warning to other high-cost lenders that the CCCFA’s provisions will be strictly enforced. The penalty reflects both the scale of Eagle MAN’s non-compliance and the potential harm to affected borrowers.
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