Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

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

 

Christians Against Poverty Heartened By Enforcement Of Responsible Lending Laws

Client Advocate Sam Mani says Christians Against Poverty is heartened to see the Commerce Commission take enforcement action against lenders who continue to disregard the law and cause hardship and distress.

“Despite the strengthening of responsible lending laws in 2021, we’ve continued to see around forty lenders disregarding the law to make a quick buck, and as a result tipping vulnerable people into financial hardship and distress.

“In the last two-and-half years we’ve successfully disputed more than 100 unaffordable loans, resulting in $850,000 of debt being written off for clients. However, by this stage the harm to clients is already done, so we hope this enforcement action sends a clear message to these lenders to behave responsibly.

“Common breaches of the law we see are lenders fudging the numbers on affordability assessments by overestimating income and underestimating expenses, and overlooking clear signs of hardship such as defaults on other loans.

“Unfortunately, the vehicle finance industry is the worst we see because of the harm caused. People go without essentials like food and power to prioritise loan payments, so it doesn’t spiral out of control given the penalty interest and default fees, as well as the risk of having their car repossessed or immobilised.

“This is one of many reasons why Christians Against Poverty continues to call for a government inquiry into the vehicle finance sector and for flex commissions, junk insurance add-ons and the punitive use of vehicle immobilisers to be banned.”

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Malia’s story (Does not want her full name published)

Malia had $16,000 of debt written off by a car lender after Christians Against Poverty advocated on her behalf to the lender.

The lender had not conducted a proper affordability assessment, failed to obtain all her bank statements and ignored obvious signs of hardship such as missed rent repayments and default payments on another loan.

Despite this, the lender issued her with a $24,000 loan with as 29.95% interest rate, payable at $217 a week.

Malia’s debt soon spiralled out of control and was unable to pay for basics including school lunches and doctor’s visits for her children. Soon her power was disconnected, and she resorted to taking out further loans to cover essentials.

At breaking point, Malia phoned Christians Against Poverty and we helped her put a budget together to prioritise essentials, and negotiated down unfair interest, fees and loans with lenders.

Malia is now able to cover essentials and is on her journey to becoming debt free—one of more than 2000 people Christians Against Poverty had helped to go debt free.

Valetti’s* story (Is not available for interview)

Valetti had $14,000 of debt written off by a car lender after Christians Against Poverty advocated on her behalf to the lender.

The lender had not conducted a proper affordability assessment, under-estimating expenses or failing to account for them completely. At the time of applying for a loan, Valetti had just moved house, but instead of enquiring into the new rental costs, the lender allocated a nominal amount of $50 a week towards ongoing accommodation costs.

Finally, the lender did not budget for the ongoing running costs of the vehicle, including petrol, WOF, registration and insurance.

Despite evidence suggesting any loan would be unaffordable, the lender issued her with a $17,000 loan with a 24.95% interest rate, requiring weekly repayments of $143.

Valetti’s debt soon spiralled out of control and was unable to pay for essentials like rent. Valetti's car was immobilised after she missed payments, causing her distress when she was unable to pick up her children from kindergarten.

At breaking point, Valetti phoned Christians Against Poverty and we helped her put a budget together to prioritise essentials and raised a complaint with the lender on the basis that the loan was unaffordable and in breach of the responsible lending requirements.

After the lender refused to remedy the hardship, CAP escalated the matter to the lender's dispute resolution service, who ruled that the lender did not meet their responsible lending obligations. The lender was told to refund all interest and fees, set up an affordable repayment rate, and provide compensation for the times when the car was immobilised.

*Name changed to protect identity

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines


Gordon Campbell: On The Perils Of Joining AUKUS Pillar Two


The lure for New Zealand to join the AUKUS military alliance is that membership of only its “second pillar” will still (supposedly) give us access to state of the art military technologies. As top US official Kurt Campbell said during his visit to Wellington a year ago:
...We've been gratified by how many countries want to join with us to work with cutting-edge technologies like in the cyber arena, hypersonics, you can go down a long list and it's great to hear that New Zealand is interested...
More


 
 

Government: Backs Police To Crackdown On Gangs
The coalition Government is restoring law and order by providing police new tools to crack down on criminal gangs, says Justice Minister Paul Goldsmith and Police Minister Mark Mitchell. “Over the last five years gangs have recruited more than 3000 members, a 51 per cent increase... More


Government: Retiring Chief Of Navy Thanked For His Service

Defence Minister Judith Collins has thanked the Chief of Navy, Rear Admiral David Proctor, for his service as he retires from the Royal New Zealand Navy after 37 years. Rear Admiral Proctor will retire on 16 May to take up an employment opportunity in Australia... More

Government: Humanitarian Support For Gaza & West Bank

Winston Peters has announced NZ is providing a further $5M to respond to the extreme humanitarian need in Gaza and the West Bank. “The impact of the Israel-Hamas conflict on civilians is absolutely appalling," he said... More


Government: New High Court Judge Appointed

Judith Collins has announced the appointment of Wellington Barrister Jason Scott McHerron as a High Court Judge. Justice McHerron graduated from the University of Otago with a BA in English Literature in 1994 and an LLB in 1996... More

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels


 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.