The Catholic Church has made submissions on the Credit Contracts Legislation Amendment Bill
The Bill amends the Credit Contracts and Consumer Finance Act by strengthening requirements to lend responsibly.
It is designed to clamp down on predatory lending practices and stop borrowers being caught in a spiral of unaffordable debt.
Writing in The SpinOff, business editor Maria Slade notes:
“The Catholic Archdiocese of Wellington points out that most borrowers use payday loans to cover ordinary living costs such as power bills, not one-off or unexpected expenses as many financiers claim.”
In a submission on the Bill, the Archdiocese quotes Pope Francis. “Usury [excessive interest] is an ancient and unfortunately still concealed evil that, like a snake, strangles its victims.
“It tramples on the dignity of people, is a vehicle for corruption and hampers the common good.
“It also weakens the social and economic foundations of a country.”
The proposed changes in the law cap the amount financiers such as Moola and NeedCashNow can charge by limiting total interest and fees to no more than 100% of the original amount borrowed.
Moola can charge annualised interest rates of up to 620% plus fees.
Slade says church, community and budgeting agencies are almost universally in support of an interest rate cap.
Many are calling for other restrictions such as a ban on shopping trucks, equal protection for loan guarantors as for borrowers, and a ban on the use of direct debit authorities by high-cost lenders.
Steve Brooks, the businessman behind a bizarre unauthorised ad for the National Party, runs a payday lending operation that has opposed government efforts to limit the amount vulnerable borrowers must pay.
Brooks is a director and co-owner of NZ FinTech which runs fringe lenders Moola and NeedCashToday and the car finance firm Zooma.
Source
- parliament.nz
- thespinoff.co.nz
- Image: pacific.scoop.co.nz Nicholas Jones