Lending pre-6 June 2015

In 2014 Masina’s friend, Talia, wanted to borrow money but didn’t have any security. Talia asked Masina if she would be prepared to let her use Masina’s car as security for the loan. Talia reassured Masina that she would make all the loan repayments and Masina did not have to worry.

Masina agreed and signed the loan agreement as a co-borrower alongside Talia. As soon as Talia got the money she disappeared, and the finance company started demanding the money from Masina. Masina paid the loan repayments for about six months, but then she lost her job and couldn’t afford to repay the loan. The finance company wanted to repossess the car but Masina said she left it with friends when she went back to Samoa and, when she came back, it was gone.

The finance company decided to write the debt off and referred it to a collection agency in 2016, meaning that the debt was listed on Masina’s credit record.

In 2019 Masina wanted to borrow money herself, but the bank declined her loan because of the bad credit listing. Masina asked the finance company to remove the listing, but it declined, saying the debt was correctly listed.

Masina said this was not fair and referred her complaint to FSCL.



Masina said all she wanted to do was help a friend and now her credit history was ruined. Masina did not understand that she was a co-borrower, she thought she was just offering Talia the security of her car. Masina said the lender should not have advanced her the loan in the first place because she could not afford the payments and the lender should have known the loan was for Talia’s benefit.

The financed company said that Masina was a joint borrower, and equally liable for the debt.



If Masina and Talia’s loan had been approved after 6 June 2015, the responsible lending provisions of the Credit Contracts and Consumer Finance Act 2003 would have applied. On the information available to us it seemed very unlikely that the lending would have been considered responsible.

However, we had to apply the law as it was in 2014. We explained to Masina that, as a co-borrower, she was jointly liable for the debt. We said the lender was entitled to pursue her for payment and, when she was unable to pay, it was reasonable for the lender to list the debt with a debt collection agency.



We advised Masina that as the debt appeared to have been correctly listed, we could not ask the lender to remove the listing. Masina did not reply, so we discontinued our investigation.


Insights for consumers

The consumer protection provided by the Credit Contracts and Consumer Finance Act 2003 only applies to lending after 6 June 2015. If your lending was before 6 June 2015, we must apply the law that was in force at the time. The lender can assume that the borrower understood the obligations and consequences of signing the loan agreement.