3 September, 2019
CAP statement regarding recent CCCFA announcement from Minister Kris Faafoi
Christians Against Poverty welcomes further protections for vulnerable borrowers; urges money lenders’ commitment to the ‘spirit behind the law’
Christians Against Poverty helps people become free from debt and poverty by providing free holistic support. In partnership with 150 local churches across Aotearoa – in eleven years of operating – more than 1500 people have gone completely debt free, and around 15,000 households have received free money education.
Every month we take calls from hundreds of people overwhelmed by debt and poverty. Every day we visit the homes of struggling families. We see empty cupboards and despairing parents buried in unmanageable debt. But it doesn’t have to be this way.
We’re pleased the government has listened to the recommendations of Christians Against Poverty and others to tighten the legislation to protect vulnerable borrowers from harmful lending practices.
An interest rate limit is a step in the right direction. However, it’s worth noting 0.8% per day is still effectively an annual interest rate of 292%. At this rate a $500 loan costs over $28 a week in interest alone. For many of our clients, that’s the difference between being able to afford school uniforms or having to take out another loan.
The inclusion of a three-year review is therefore necessary to evaluate the impact of this limit on vulnerable borrowers, and whether it goes far enough. We encourage the government to make further changes if and when they are required.
Christians Against Poverty is pleased to see mobile traders having to abide by the same credit laws as other lenders, and to see the possible legal requirement for lenders to refer clients struggling with repayments to financial mentors.
The Reserve Bank has recently spoken of the need for bank-lenders to help clients in default. We emphasize it’s just as, if not more, important for non-bank lenders to be doing this too—and not just as a tick box exercise – but out of a genuine duty of care towards their clients.
We encourage money lenders to not only follow the law, but the spirit behind the law.
In New Zealand, as a society we care for our most vulnerable. It’s just not right to profit off people’s hardship and suffering. But we can solve this if we put our minds together. Today is a step in that direction.
If you’d like to read CAP’s initial oral submission to the Select Committee, you can view it here: