Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


New credit and finance bill "toothless" says credit union

Toothless new credit and finance bill won’t curb scourge of payday lending


An alarming growth in borrowing for everyday needs – particularly within poorer Auckland communities – is being fuelled by a burgeoning payday loan industry, and new credit legislation is unlikely to fix the problem.

The Credit Contracts and Financial Services Law Reform Bill, which passed its third reading in Parliament this week, is being hailed as a clamp down on loan sharks, but is essentially toothless in dealing with the real problem of everyday lending by unscrupulous loan sharks, says a local credit union.

The Bill amends the Credit Contracts and Consumer Finance Act, the Financial Service Providers (Registration and Dispute Resolution) Act, the Private Security Personnel and Private Investigators Act and the Personal Property Securities Act.

Education and Development Manager at Westforce Credit Union, Tu Nuualiitia, said today that requiring lenders to ‘act with skill, care and diligence in all dealings with a borrower’ was like dropping lambs into a crocodile pit, and telling the crocodiles to go easy.

“The essential thrust of the bill requires responsible lending by, for example, requiring timely and complete disclosure of loan terms. Well, if that isn’t an invitation to bury people in paperwork – some of whom are semi-literate – then I don’t know what is.”

While Mr Nuualiitia welcomed the licensing of repossession agents and employees, he likened the requirement to shutting the stable door after the horse has bolted.

“We need payday lenders and other loan shark operations to be licensed too, because at the moment anybody can set up shop and there’s nothing stopping them from lending money at outrageous interest rates – as many of them do.

“How is a Responsible Lending Code going to change the behaviour of somebody who has no conscience about charging families interest rates in the region of 800 per cent?”

Mr Nuualiitia called for:

• A cap on the interest rates loan sharks can charge
• Licensing of private lenders
• A ban on payday, door stop and retail truck lenders
• Workplace based education on budgeting, money management and the risks posed by loan sharks

“Consumer Affairs Minister Craig Foss says the Bill reflects the National Government’s commitment to protecting vulnerable New Zealanders from spiraling debt, without imposing unnecessary compliance costs on responsible lenders.

“However, changes around the repossession regime, while good, will mostly penalise responsible lenders who require security against loans.

“Irresponsible lenders do not require security or even an ability by the borrower to pay the money back.

“When you are desperate for money to feed the family or pay bills, you will take what you can get and worry about the consequences later.

“Unfortunately the consequences that follow are far more severe – leading to gambling problems, alcohol abuse and marriage breakups – than being short of cash to pay the bills. The result is a downward spiral and vicious circle of borrowing.”

Mr Nuualiitia commended the Government’s desire to use changes in the legislation as one more way to boost confidence and trust in New Zealand’s financial markets, but says the real issue is a social one.

“For people at the coal face of the economic, day-to-day struggle, the first priority is to put food on the table and pay the bills. Unfortunately payday lenders out there are exploiting that need and, it seems, they’re set to be given a free rein for some time yet,” he said.

ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Syriza Winning Greek Election: The Rumblings Of The Left

Binoy Kampmark: The left – and by this, the genuine, progressive, unmanagerial left – is getting noisy. The Greek elections are upon us, with the similar challenges being played out from 2012. There are fears of Grexit – a heavy breathing departure from the eurozone that will do everything to rattle the central currency mechanism that has been taking a battering...

Much of this has been triggered by the moral outrage and political response of the left grouping centred on Syriza of Greece. The movement has been said to have similarities to a new constellation of power in Spain, led by Podemos. Syriza, led by Alexis Tsipras, has promised to renegotiate the terms of Greece’s 240 billion euro international bailout arrangements. Both parties point out to the distance between elector and the elected, a creeping death of democratic accountability in favour of market propriety. More>>

 

Transport: Auckland Looks To Light Rail

The Board of Auckland Transport has called for an investigation into a light rail network, which could relieve traffic congestion on some of the region’s busiest roads. This stems from work in 2012 (the City Centre Future Access study) which responded to a government request to develop a robust and achievable solution for access to the CBD. More>>

ALSO:

RMA: Smith's Claims Don't Match Evidence - Greens

The Motu group’s research into the impacts of planning rules looked at the costs related to housing development but not the benefits of environmental protections and does not recommend significant changes to the RMA to reduce the cost of new house builds. More>>

ALSO:

Gordon Campbell: On The Similarities Between John Key And David Cameron

For years now, David Cameron has been the closest available thing to a mentor/analogue to our Prime Minister, such that Key watchers could be interested in an analysis of Cameron that appeared in the British press over the Christmas break. More>>

Gordon Campbell: On Ian Fletcher Resignation & GCSB’s New Role

It may well be that after being shoulder-tapped in Queensland for the GCSB job, three years of living in Wellington has been enough for Fletcher and his family, given that the pending review of the GCSB would have required an even longer commitment from him. Three years of Wellington’s weather is enough for anyone... More>>

ALSO:

Ian Apperley: $10m Or $100m For New Wellington Council IT System?

I feel a Tui Billboard coming on. I commented the other day that it looked like the Council’s Ninth big project was a potential $100 million plus... The Mayor has responded: “I am reassured by the Chief Executive and by Anthony Wilson that the proposed budget is in the region of $10 million.” More>>

ALSO:

Southern Ocean:
Navy Intercepts Illegal Fishing Vessels

Foreign Minister Murray McCully today put illegal fishing vessels operating in the Southern Ocean on notice and vowed to take action against their owners. “As part of a multi-agency operation, the HMNZS WELLINGTON has intercepted two vessels claiming to be flagged to Equatorial Guinea, fishing illegally in the Southern Ocean.” Mr McCully says. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news