KEY POINTS:
The Commerce Commission is to prosecute a South Auckland loans company which targets Pacific Islanders and has warned six others for allegedly failing to provide important information to customers taking out personal loans.
Adequate disclosure is required under the Credit Contracts and Consumer Finance Act.
The commission said the six companies that had been warned were Mana'ia Financial Services, Sala Multi Services, Winston's Finance, Houmatetefa Finance, Mizpah Trading and Funaki Enterprises.
The commission said it would not comment on the prosecution of the seventh company.
The loans companies targeted Pacific Island consumers by advertising in Pacific language newspapers and offering short-term cash loans.
Traditional Tongan mats are often used as security for the loans.
The commission found that the companies it warned 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.
"Disclosure of information is the cornerstone of the 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".
Warnings
Loans companies that had been warned:
Mana'ia Financial Services
Sala Multi Services
Winston's Finance
Houmatetefa Finance
Mizpah Trading
Funaki Enterprises
- NZPA
