But action in the area of debt and financial hardship has been quite muted and lacks strategy the Salvation Army says.

In a report published last Thursday, they say: "This must change quickly, especially if the lockdown drags on and other related areas are impacted (e.g. job losses, income support payments), which will cause overall financial hardship for many New Zealanders."

The report notes that the Ministry of Social Development (MSD) has been proactive in working with community groups and NGOs: "but government agencies' own ability to respond seems limited and is taking time to scale up to meet the level of need."

"The Government action in this area of debt and financial hardship has been quite muted and lacks strategy."

"They say most Government action has involved banks. Still, other critical parts of the financial sector must also be given attention to ensure the most vulnerable do not fall into greater financial hardship."

They are concerned that there has been little Government guidance around car loans, payday lenders or credit cards.

Last week the Salvation Army joined 14 other NGOs in calling for urgent action to combat financial hardship during the lockdown.

The key elements of this joint call include:

• No disconnections or service cessations
• Pausing debt collection and bankruptcy proceedings
• Waiving penalty and late fees including additional interest charges
• All payday lenders and providers of high-cost, short-term loans should immediately be de-categorised as an essential service so that
  vulnerable families do not quickly turn to these high-interest loan options for help
• Further guidance around debt relief for car loans, credit card and loans to mobile traders to protect vulnerable consumers.

Source

• salvationarmy.org.nz
• stuff.co.nz
• Image: screenshot msd.govt.nz

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

Companies with interest rates of up to 43 per cent are being accused of "targeting the vulnerable" in Auckland's lower socio-economic groups.

Finance Now mailouts offer customers the chance to "enjoy a special surprise this Christmas". If they take out a $2,000 loan they go into a draw to win a Suzuki Swift.

Instant Finance offers customers a free mobile phone for spending more than $500 on its hire purchase home furnishings and appliances. Keep reading