Japan financial regulator punishes Takefuji

By David Dolan and Sachi Izumi

TOKYO (Reuters) - Japan's financial regulator ordered moneylender Takefuji Corp (8564.T) to stop heavy-handed debt-collecting tactics that have included playing music outside customers' doors with the lyrics "Return the money you have borrowed."

Japan has cracked down on its massive moneylending industry in recent years, following complaints about exorbitant interest charges and strong-arm collection tactics.

The Financial Services Agency ordered Takefuji to improve operations and its internal supervision after the lender used improper methods in some cases to collect debts, such as banging on front doors and playing music that demanded repayment.

A local branch of the Finance Ministry, to which the regulator passed down authority on the matter, said Takefuji altered records to hide improper collecting tactics.

Takefuji said it uncovered the action in an internal investigation and after complaints from customers.

"We have penalised those involved in each case, including dismissal, and we are trying to improve our internal controls and prevent recurrence of similar activities," Takefuji, which had previously received business suspension orders in 2003 and 2004, said in a statement.

The FSA also punished smaller moneylender Sanwa Finance Inc, ordering it to suspend some operations for improperly collecting debts and failing to keep records on such actions.

Separately, the Asahi Shimbun daily reported on Friday that Japanese Prime Minister Yasuo Fukuda is considering shifting the authority to supervise laws governing consumer lending to the planned consumer agency.