Pay lender fined $76k and director banned from selling consumer finance for life

A pay day lending firm and its sole director have been fined $76k by the Commerce Commission. Photo/Gerald Ford.

The director of a payday lending company has been banned indefinitely from offering consumer finance and fined $76,000 after breaching credit and fair trading laws.

Gavin Marsich, the sole director of Twenty Fifty Club Limited, was sentenced in the Manukau District Court after he was found guilty of 16 charges.

The charges were brought by the Commerce Commission and included failing to disclose loan information to borrowers, charging unreasonable fees and failing to provide information to the commission to aid its investigation.

The commission's case follows criminal action bought by the police last year in which Marsich was found guilty of possessing an offensive weapon after he showed a potential borrower a meat cleaver while describing the company's debt collection practices.

In that case he was ordered to pay $800 emotional harm to the victim and $130 in court costs.

Twenty Fifty Club operated in South Auckland and charged a fee that was 50 per cent of the loan amount as a "marketing fee" or "marketing koha".

The fee and the loan were then due to be repaid on the borrowers next pay day or within seven days of the loan.

If the borrower did not pay, the company would roll-over the loan and charge another fee of 50 per cent of the outstanding balance.

The commission said at least 82 debtors were caught up in the loan scheme with over 234 loans.

Twenty Fifty Club's business structure and loan documentation reflected an intentional disregard for compliance with important consumer protections.

Anna Rawlings, commissioner for Commerce Commission

Anna Rawlings, a commissioner for the Commerce Commission said Marsich's offending was serious as Twenty Fifty Club's failure to comply with consumer protection laws caused significant harm to borrowers.

"Twenty Fifty Club provided credit to vulnerable consumers who often required urgent loans and generally could not get credit elsewhere.

"Its customers were not given the important information they needed about their loans such as their right to cancel their contract or the consequences of not meeting their loan obligations."

"The way in which the fees were charged made it almost impossible for consumers to compare Twenty Fifty Club's loans with other loans," she said.

The judge also ruled Twenty Fifty Club could no longer enforce its marketing fee or default fees on any existing loans.

In addition to the $76k fine Marsich must pay $4,400 in compensation to one borrower.

Rawlings said that all lenders had a responsibility to operate fairly and to understand consumer credit law requirements.

"Twenty Fifty Club's business structure and loan documentation reflected an intentional disregard for compliance with important consumer protections.

"The Judge's ban reflects the fact there is no tolerance for this type of behaviour in the industry," she said.