A new initiative from The Salvation Army aims to reform the damaging effects of problem debt and fringe lending in low
socio-economic areas across New Zealand by providing an ethical shopping alternative.
In a bid to curb unethical lending in our most vulnerable areas, The Salvation Army will launch a new shopping truck in
South Auckland on Tuesday 19th February.
The Good Shop is a roving truck offering vulnerable consumers access to honest financial advice and quality goods at no interest—a
stark contrast to the 800 per cent terms that The Salvation Army has seen in some mobile lending operators’ contracts.
The predatory lending industry is booming, growing 39 per cent or by $1.5 billion in the past five years1. With multiple
reports about unscrupulous lenders and following Prime Minister Jacinda Ardern’s 2018 announcement to regulate and place
an interest cap on non-bank loans, The Salvation Army says its decision to invest time and resource on an innovative
ethical option will bring solutions directly to people and offer financial literacy advice.
“We knew we needed to start reform now. Every day we see people trapped in a cycle of debt by these loans, with no other
options open to them and often with limited economic understanding. The Good Shop will positively disrupt the current
mobile trading business model that can have extortionately high-interest rates and repayment plans that exploit our
people,” The Good Shop Project Manager Jodi Hoare says.
“The Good Shop will provide a safe alternative solution to people who may struggle with transport, are unable to make
upfront payments or cannot obtain credit from mainstream stores to purchase what they need.
This initiative wouldn’t have been possible without the delivery partners The Warehouse Group, BNZ and Countdown, and
additional financial support from the Ministry of Social Development, The Tindall Foundation and Nikau Foundation,” Mrs
Hoare says.
“Not only will the initiative bring fair and ethical credit directly to the streets, it will also increase public
exposure to financial education and undo some of the damage that has been done by predatory loan services in the
community.”
Essential household items such as food, furniture, electronics, appliances, whiteware and baby items will be available
via online shopping technology on board the truck. Salvation Army workers will be on hand to assist clients plus provide
referrals to other services and welfare that may benefit them, including budgeting advice.
Through The Good Shop, consumers will be able to access The Salvation Army’s interest-free loans supported by BNZ and
Good Shepherd NZ to buy cost and energy-efficient items at competitive prices from The Warehouse, Noel Leeming and
Warehouse Stationery plus grocery items from Countdown. Credit will not be extended to groceries given it is an ongoing
consumable expense, however supporting people to access food at standard supermarket prices is a key role of The Good
Shop.
“Thanks to the generosity of our partners, a significant number of people in need have an opportunity to avoid the
problem debt cycle as we start to build financial capability in these communities,” says Hoare.
The Salvation Army plans to roll out the initiative across more communities with high deprivation and where The Army
currently has a strong presence providing social services, with a second vehicle already planned for Wellington in
mid-2019.
Key information about the service:
• Each truck will feature two computers for clients to access online shopping technology with goods available from
retail partners. The trucks will not carry any physical goods
•
• Interest-free loans will be available on a case by case basis and repayment plans fall under The Salvation
Army’s Community Finance Programme. Workers are trained to provide financially responsible solutions for both the client
and for the programme
•
• Approximately 66% of clients interviewed for an interest-free loan are approved
•
• Loans can be used for goods including home appliances, computers, whiteware, TVs and furniture. The service
excludes items such as gaming consoles and will look to include cost and energy efficient items
•
• Credit is not available for grocery products available at The Good Shop, clients will instead pay The Salvation
Army via EFTPOS who will act as an agent on their behalf to Countdown. Some clients will be supported over a period of
time to get to a place where they are able to do this.
•
Key information about non-bank lending mobile traders:
• A report carried out by the Commerce Commission in 2015 reviewed the damaging effects of mobile traders, finding
that the more sizeable enterprises of the 32 identified across New Zealand had a customer base of more than 35,000
customers and made more than $7 million in annual revenue2
•
• The government is considering changes to the Credit Contracts and Consumer Finance Act following the 2018 review
of consumer credit law3
•
• As a result of the proposed changes mobile traders may need to pass a fit and proper person test, and register
on the Financial Service Providers Register. ‘Do not knock’ stickers could become legally enforceable. This aims to lift
professionalism in the sector and give consumers more power to refuse to engage with mobile traders3
•
• Other proposed changes would see lenders required to prove (substantiate) that their fees are reasonable if the
Commerce Commission asks them to do so, and to share key loan information with debtors at the start of debt collection
activity3
•
• A draft bill will come before Parliament in early 2020, subject to parliamentary changes
•
Key information about the partners involved:
• BNZ has provided the funds to purchase the first two Good Shop trucks, it will also provide capital for the
Salvation Army’s lending, as well as lending expertise for the programme workers
•
• The Warehouse Group will offer a range of approved product at RRP. Clients will view items via computer and
purchase for delivery once their loan is approved
•
• Countdown will provide online grocery shopping at RRP to people who find it difficult to access mainstream
supermarkets. Countdown will deliver shopping orders the following day at a discounted delivery fee
•
• The Tindall Foundation has committed financial support
•
• Nikau Foundation has committed financial support
•
• Ministry of Social Development has committed financial support
•