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

 

PARLIAMENT TODAY:

Flyover Over: NZTA Not Appealing Flyover Decision

The NZ Transport Agency has decided not to appeal the High Court’s Basin Bridge decision, and says the High Court’s findings provide valuable clarity to help guide the development of future infrastructure projects throughout the country. More>>

ALSO:

Developing Crown Land: Government, Auckland Iwi Reach Agreement

The government has reached agreement with Ngati Whatua and other Auckland iwi over developing 500 hectares of excess land in Auckland for private housing which had been under High Court challenge. More>>

ALSO:

Gordon Campbell: On Maurice Williamson

Maurice Williamson seems to have been granted an annual licence to embarrass the National Party, and its that time of year again. Also as per usual, Williamson’s recent exercise in sexism and homophobia has passed by with barely a murmur from his leader. More>>

ALSO:

Green Climate Plan: Shaw Launches 40% Emission Cut Target

Green Party co-leader James Shaw has announced an emissions target initiative for 40% reduction by 2030. He said agriculture has to long been used as a reason for inaction, a roadblock to action... He proposed a tax of 8 cents per kilo of milk. More>>

ALSO:


Images & Video: Four Alternative Flags For Referendum

Flag Consideration Panel chair, Professor John Burrows, said the Panel’s decision had been guided first and foremost by the results of its engagement programme across a range of communities where thousands of Kiwis shared what was special about New Zealand, as well as the Panel’s own selection criteria. More>>

ALSO:

Transport Report: LGNZ Calls For Proactive Approach To Mobilise Regions

LGNZ has today released Mobilising the Regions, its major transport study, which highlights the economic and social impact of strategic transport decisions nationally and in the regions, and the direct link between regional development, national prosperity, social well-being and cohesiveness. More>>

ALSO:

Transport: New Rules Bring Double-Deckers To Our Cities

New rules that allow buses, including double-deckers, to carry more people will ramp up the public transport offering in our cities, Transport Minister Simon Bridges and Associate Transport Minister Craig Foss say. More>>

ALSO:

Cycling:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news