Reducing The Risk Of A Flood Of Financial Misery

As the floodwaters from Cyclone Gabrielle recede, community finance providers warn of another wave of catastrophe for already struggling Kiwi families.

The Credit Contracts and Consumer Finance (Exemption for Emergency Relief) Amendment Regulations 2023 announced yesterday will enable some consumers affected by the recent extreme weather events to access up to $10,000 of support available through home loan products and overdrafts.

While this is welcome news for people covered by this support, it is yet another example of financial exclusion, say community finance providers.

Money Sweetspot cofounder Sasha Lockley says that many Kiwi already excluded from mainstream banking services and affordable finance have been significantly affected by the cyclone.

"Those who are renting, uninsured, on low incomes and paying higher interest rates for their loans not only need immediate emergency support, but also long-term financial help."

"The risk is that already financially vulnerable people will feel they have no choice but to resort to high-cost debt to replace vehicles and appliances and cover lost income - creating enormous problems down the track."

Natalie Vincent CEO of Nga Tāngata Microfinance says, "When your average household income is $36,000 and you’re already juggling thousands of dollars of problem debt, taking on more interest-bearing credit will inevitably end up in a debt spiral."

"Many whānau across Aotearoa have already been struggling with unliveable incomes and unmanageable debt. They do not have the financial security to weather a crisis. The impact of the recent storms is adding more pressure and creating further hardship"

While many families will be taking a "borrow first ask questions later" approach to tackle post-flood challenges, Sasha and Natalie say there are alternatives and that now is the time to ensure community finance and debt solution providers are front and centre as safer, kinder, options for those in need.

These include:

- Free financial advice through moneytalks.co.nz , debtfix.co.nz and fincap.co.nz

- Interest-free and fee-free loans for low-income families from ngātāngatamicrofinance.org.nz and goodshepherd.org.nz

- Financial Reset Loans to alleviate high-cost debt for all Kiwi from moneysweetspot.co.nz

© Scoop Media