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

 

PM's Press Conference: Crime And Diplomacy

The Prime Minister's press conference today was dominated by foreign affairs and an open letter from the PM to the Chinese community on crime. More>>

ACC: Govt Caught In Unethical Cluster Bomb Investments

The ACC Fund admitted that it had $1.4 million invested in cluster munitions and nuclear weapons manufacturer Lockheed Martin. Before responding to the Green Party’s request for information,however, ACC sold its Lockheed investment and updated its ethical investment policy. More>>

ALSO:

Local Governments To Decide: Easter Trading Bill Passes

The union representing working people in the retail industry is condemning the Government for whipping its MPs to pass the controversial Shop Trading Hours Amendment Bill. More>>c

ALSO:

Departure Speech: Governor-General’s State Farewell Luncheon

"...Unfortunately I was unable to get to the Antarctic, the Chatham Islands and the Kermadecs. A dicky heart thwarted our travel to the Antarctic; and even though I volunteered to parachute into the Kermadecs to join the Young Blake expedition, time, commitments and officials frustrated my plans to visit the Kermadecs and Chathams." More>>

ALSO:

New Research: Most Homeless People Working Or Studying

“The cost of housing has been rising without corresponding increases in income, whilst the number of state houses per capita has been in decline. Many low-income people are missing out on housing, whether we recognise them as ‘homeless’ or not. More>>

ALSO:

Post-Traynor: New Offender Info Sharing Plan

“This Bill delivers on that step-change by moving away from name-based records held by individual agencies to a shared, anchor identity based on unalterable information, such as fingerprints and facial recognition. It also gives agencies access to the drivers’ licence photo database and birth, death and marriages information." More>>

  • NZ Law Foundation - New $2M fund for research on information challenges
  • Littoral: New Ship To Deliver Enhanced Naval Capability

    Defence Minister Gerry Brownlee says the Government has approved a Ministry of Defence and New Zealand Defence Force recommendation to request tenders for a new naval ship to support littoral operations. More>>

    July:

    After King's Labour Snub: Māori Party And Kiingitanga To Work Together

    Māori Party Co-leaders Te Ururoa Flavell and Marama Fox met with Kiingitanga representatives in Wellington yesterday to discuss working together on key issues for the betterment of Māori. More>>

    ALSO:

    Waitangi Claim On Rehabilitation: The 'Justus' System For Māori Not Good Enough

    Closing statements at the Waitangi Tribunal case against Corrections called for immediate steps and a comprehensive review to address the high rate of Māori reoffending. More>>

    ALSO:

    Advice: PM Sets Rules For Ministers' Treatment Of Public Servants

    Prime Minister John Key has laid down the law about the way ministers and public servants should interact, saying ministers may not always like the advice they receive, but they must listen to it carefully, respectfully and professionally. More>>

    Get More From Scoop

     

    LATEST HEADLINES

     
     
     
     
     
     
     
     
     
    Politics
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news