Loan shark sentenced to fine and banned from lending

A lender convicted of failing to disclose key information to borrowers in the Chinese community was “an unscrupulous lender” who charged “exorbitant and appalling” rates, according to the sentencing judge.

Judge Mary Sharp made those remarks in the Auckland District Court in fining Yuan Rong Yang, former owner of Sunway Finance and money lender to Auckland’s Chinese community for at least 17 years, $22,500 and banned him from lending indefinitely.

Yang, who lent money both personally and through his Sunway Finance company to members of the Chinese community, had earlier pleaded guilty to two charges brought by the Commerce Commission under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and was convicted.

Commissioner Anna Rawlings said Yang did not document the loans he made to borrowers and typically just had a verbal agreement with his customers, who were often contacts from within his community.
 
“Mr Yang operated his business without disclosing any basic information to borrowers, including his method for charging interest, the credit fees and charges, the amount of each repayment and total number of payments required.

The law requires lenders to disclose this information, and more, to ensure borrowers can properly understand the obligations they are committing to when taking out a loan.”

Yang’s first charge relates to a customer who was a regular borrower. The complainant was never provided with any loan documentation or account statements. For each $1000 borrowed, Mr Yang charged about $50 per week in interest, equating to an annual interest rate of around 260%. The complainant continued to borrow money and by May 2013 owed Yang $15,000 and about $870 per week in interest.  After struggling to afford payments, the complainant stopped paying Yang in February 2013.
 
Yang admitted to the commission personally lending money to seven customers without providing loan documentation to them. This formed the basis of his second charge. He also said he did not have any knowledge of the CCCFA or his obligations under it, nor his requirement to be registered under the Financial Services Providers Act 2008.

Ms Rawlings said lenders must be fully compliant with the CCCFA’s updated lending requirements, including amended disclosure requirements and new requirements for responsible lending, which came into force in June.

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