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Responsibility for lending to peers

Isaac applied for $7,000 a loan from a peer to peer lender. On the information available Isaac did not appear to provide any proof of his income, yet the loan was approved within 24 hours, for an increased amount of $10,000. Isaac immediately defaulted on the loan and complained to the lender that he could not afford the loan repayments.


Isaac’s view

Isaac, with the help of an adviser, complained to us that the peer to peer lender had not complied with the responsible lending obligations introduced by the 2015 reforms to the Credit Contracts and Consumer Finance Act 2003.


The lender’s view

The lender considered Isaac was obliged to repay the debt and suggested Isaac refer his complaint to FSCL. Isaac did so and we began our investigation.



We asked the lender to provide all the information it obtained from Isaac when assessing his loan application. The lender replied that it was considering writing off Isaac’s debt, and asked us to obtain information from Isaac about his income and expenses. Isaac provided the last three months’ bank statements, and we forwarded the statements on to the lender.

The lender advised that it had decided to write off Isaac’s loan.



Isaac accepted the lender’s offer, and the complaint was resolved on this basis


Key insights for the participant

The Commerce Commission has applied to the Court for a declaratory judgement as to whether peer to peer lenders are caught by the obligations on all lenders to comply with the responsible lending guidelines. In the meantime, we are proceeding on the basis that responsible lending guidelines do apply. If we had been required to investigate this complaint, we would have wanted to satisfy ourselves that the lender had sufficient information to show that Isaac could afford to repay the debt without suffering financial hardship.