Credit review and measures to stop predatory lending released for discussion
Minister of Commerce and Consumer Affairs Hon Kris Faafoi today released the discussion paper outlining findings from the review of the Credit Contracts and Consumer Finance Act.
Possible measures identified in the paper to protect consumers include caps on interest rates and fees, increased licensing or registration for lenders, strengthening enforcement and penalties for irresponsible lending and introducing more prescriptive requirements for affordability assessments and advertising.
Continued predatory behaviour by mobile traders is also considered, as is extension of the Act to cover credit not currently covered including after pay options.
Mr Faafoi says that the findings of the review confirmed what he has been hearing from budget services and vulnerable consumers across New Zealand.
“Clearly the 2015 amendments to the Act did not go far enough and it is time now to finish the job and protect the most vulnerable consumers.
“I’ve spoken with people who have been given loans that are clearly unaffordable for them, and others who have been lashed with huge penalties and fees. These practices trap people and whanau in an appalling debt spiral that is very difficult to get out of.
“While agencies including our hosts today (Salvation Army and Newtown Ethical lending) are doing what they can to help people, we need to ensure the regulatory settings are right to stop the practices that get people into these terrible situations.
“As a Government we are tackling many of the issues that lead to financial stress, and by 2020 the Families package will see 385,000 families with children made better off by an average of $75 a week when the Package is fully implemented.
“Also getting the credit settings are right, so that people can borrow appropriately when they need to but are not dragged into a long-term debt spiral is another way we will ensure all New Zealanders benefit from a strong and inclusive economy.”
The review of consumer credit regulation discussion paper is available here. Submissions close on 1 August.