Iwi responds to letter to ensure whānau stays safe from predatory lending

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Muaūpoko Tribal Authority chief executive Di Rump said keeping the amendments would protect whānau from unaffordable loans.

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Muaūpoko Tribal Authority chief executive Di Rump said keeping the amendments would protect whānau from unaffordable loans.

Protecting the whānau from financial disaster is the goal of a Horowhenua tribal authority backing a joint letter calling for support for recently imposed credit reforms.

The open letter, signed by a host of national experts, garners support to ensure lenders comply with changes to the Credit Agreements and Consumer Credit Act (CCCFA) in December 2021.

The purpose of these revisions was to improve lender standards and better protect consumers against predatory lending.

Muaūpoko Tribal Authority chief executive Di Rump said the iwi signed the letter because the prosperity of whānau in Horowhenua was a priority.

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Amendments to the law supported this by protecting whānau from unaffordable loans.

“Poverty causes real harm to the community and unfair and unaffordable loans contribute to poverty.

“Whānau should not have to endure the stress and loss of property that can result from unfair lending.”

She said no one should have to go without essentials to repay a loan that “will always be unaffordable”.

The latest reform has clarified what lenders should consider when determining affordability.

When a lender makes a loan, they must undertake these financial health checks to ensure that all essential living expenses for a household are taken into account.

With these checks, borrowers are assured that their lenders would not deliberately put them on the path to financial ruin by charging them expensive interest and fees or putting them into unsuitable arrangements.

The letter says the broader reform is already making a positive difference on the ground and community services have reported fewer problems with high-cost whānau loans.

Centrix data shows lending has become more restrictive since changes to the Credit Agreements and Consumer Credit Act (CCCFA) came into force in December, with the number of approvals falling further this year. this month.

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Centrix data shows lending has become more restrictive since changes to the Credit Agreements and Consumer Credit Act (CCCFA) came into force in December, with the number of approvals falling further this year. this month.

“This is part of our ongoing work in partnership with FinCap, supporting a campaign to ensure the law remains strong,” Rump said.

FinCap chief executive Ruth Smithers said the new standards strike a fairer balance between a lender and a borrower.

When regulations were not followed, whānau would have a clear path to take to challenge this.

“A spiral of debt where a whānau is even more in deficit and in debt every day is entirely avoidable.

“This is particularly the case where lenders are clearly required to honestly verify that they are selling a loan, which will not immediately see a dilemma between repaying the loan or buying food.”

Christians Against Poverty senior policy adviser Michael Ward said changes to the law ensuring lenders carry out proper affordability assessments had been hard-won, but the benefits of the reforms were overwhelmingly positive for lenders. people vulnerable to financial hardship.

“As a result of the changes to the CCCFA, we expect fewer customers experiencing financial hardship, fewer customers going through insolvency proceedings, and fewer unreasonable charges and advertising targeting vulnerable consumers. We are very happy.

“We therefore urge the government, in its review, to continue to require lenders to adhere to thorough affordability assessments.”

The letter is supported by ActionStation, Christians Against Poverty, Citizens Advice Bureau, Debtfix, FinCap, Good Shepherd NZ, Muaūpoko Tribal Authority, New Zealand Council of Trade Unions – Te Kauae Kaimahi (NZCTU), Ngā Tāngata Microfinance and The Salvation Army.

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