Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


New Zealand’s responsible lending code not worth the paper

Westforce Credit Union

MEDIA RELEASE

21 July 2014

For immediate release:

New Zealand’s responsible lending code not worth the paper

While the UK last week became a slightly safer place for vulnerable consumers with a cap on payday lending, the New Zealand Government took steps to “ask" the loan sharks to participate in writing their own Responsible Lending Code.

The move this week by the UK’s Financial Conduct Authority to limit payday loan interest rates (to not more than a daily interest rate of 0.08 per cent of the amount borrowed) has real teeth, Operations Manager at Westforce Credit Union, Victor Martick, said today.

“By stark contrast, New Zealand’s Commerce and Consumer Affairs Minister Craig Foss’s announced they were receiving submissions for the ‘let’s all play nice’ Responsible Lending Code.

“This industry led and influenced Responsible Lending Code gives free rein to unscrupulous loan sharks who want to continue to prey on the less privileged with crippling interest rates – if people can’t lend fairly now, how is the Government asking them to ‘play nice’ going to change anything?”

“The Responsible Lending Code is like a verbal contract, not worth the paper it is written on,” Mr Martick said.

He pointed out that Government has likened the Responsible Lending Code to following both Britain and Australia’s lead, but fails to mention that those countries also cap interest rates, or have signalled their intention to do so.

“Mr Foss makes much of the assertion that adopting a Responsible Lending Code will increase protection for borrowers ‘without imposing unnecessary compliance costs on lenders who already have good systems in place’ – but what about all the ones who don’t?

“It would appear that the priority of Government is towards keeping compliance costs down, but shouldn’t their first obligation be to the most vulnerable in society? Rather than those who are making huge profits and are perfectly capable of taking care of themselves?

“Here at Westforce Credit Union we encounter people who are living in misery as a result of the activities of loan sharks and we can only conclude that Mr Foss is living in Lala Land if he thinks a loan shark is going to sit down with a ‘mark’ to ensure they can make the repayments without suffering hardship,” Mr Martick said.

The Responsible Lending Code provides only general guidance and there is a huge amount of leeway for how it may be applied in practise.

Mr Martick said the Credit Contracts and Consumer Finance Bill requires people, including those in the lower socio economic rungs of society (people who have poor education, no financial literacy and no money), to go to a disputes tribunal, and then only if they can prove the agreement is oppressive. Unfair doesn't even qualify.

“Interest caps will not hurt the profits of responsible lenders – of which Westforce Credit Union is one – and nor will they impose any burden on compliance. Interest caps are the only way we are going to be able to protect the vulnerable in society from loan sharks,” Mr Martick said.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Negotiations Fail: Christchurch Convention Centre Build To Proceed Without PCNZ

After protracted negotiations, the government has ditched the construction consortium it picked to build Christchurch's replacement convention centre, which it now anticipates delivering at least two years behind the original schedule. More>>

ALSO:

Ruataniwha: Greenpeace Launches Legal Challenge Against $1b Dam Plan

Greenpeace NZ is launching a legal challenge against a controversial plan to build a dam that’s set to cost close to $1 billion and will pollute a region’s rivers. More>>

ALSO:

Inequality: Top 10% Of Housholds Have Half Of Total Net Worth

The average New Zealand household was worth $289,000 in the year to June 2015, Statistics New Zealand said today. However wealth was not evenly distributed, with the top 10 percent accounting for around half of total wealth. In contrast, the bottom 40 percent held 3 percent of total wealth. More>>

ALSO:

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news