Big changes needed to protect consumers
A survey of New Zealand’s free local financial capability and budgeting services exposes the human damage being caused by loan companies and debt collectors and reveals the extent of law reform needed.
The survey of these frontline services shows that:
- Most people have more than one debt, with one in four having three debts or more;
- 9 out of 10 of the budgeting services believed that clients were worse off overall by having a high-cost loan;
- Almost all debt collectors add additional collection fees and interest to loans.
- Harmful behaviour from debt collection agencies far outweighed helpful action. Examples of harmful behaviour include repeated phone calls, frightening or threatening letters and visits to people’s home by debt collectors.
Tim Barnett, Chief Executive of the charity FinCap, said today:
"New Zealand consumers need protection from these predatory companies. Our bottom line is that New Zealanders should get the same level of protection as the Australian Government has given their citizens. They don’t. Although pleased that our Coalition Government is moving to strengthen consumer credit law, their proposals fall well short of what is needed. The new law needs to include interest rate caps, real controls over debt collection companies and faster enforcement of breaches to the law."
"Most households in financial crisis include children. Principled and workable law in this area will reduce the poverty they face, and free funds for genuine essentials. What better gift could they get in 2019?"
The survey was conducted between December 2018 and January 2019, by Liz Gordon, justice and social policy researcher (through the Justice Innovation Centre in Canterbury). The research was
funded by the Michael and Suzanne Borrin Foundation - an independent philanthropic organisation
in New Zealand.
"Our law on consumer credit has a disproportionate impact on some of our country’s most
vulnerable people and families. We are pleased to be supporting important new research that will
Suzanne Borrin Foundation.