10 October 2018
FinCap welcomes the Government’s announcement of stricter controls over loan companies and debt collectors. The charity
works with New Zealand’s 200 free budget services and the 60,000 people who use their services each year, and has helped
over half those services to provide detailed, compelling evidence and personal stories to the review process which
preceded today’s announcement.
Chief Executive Tim Barnett said today:
“The Government has listened to the experience and concerns of New Zealand’s 1200 financial mentors, who work day after
day with people forced into debt and poverty by the greed of inadequately regulated loan companies. We are pleased to
see the Government tackle issues that previous reforms have failed to address – including plans to clamp down on pay day
lending, introduce fit and proper tests for lenders, regulate debt collection, improve compliance around affordability
and suitability of loans, and tougher enforcement”.
“We would like the Government could go further, by introducing a tighter interest rate cap and licensing of people and
companies providing loans. Many people in debt have borrowed money which is very expensive – for example lines of credit
from truck shops, expensive credit cards, and finance for cars - but would not be affected by the proposed interest rate
caps in this reform. And there needs to be a stronger mechanism for preventing potentially rogue or harmful operators
entering into the marketplace”.
“We welcome the Government’s acknowledgment that consumer debt is related to child poverty. The lives of children are
harmed by the excessive repayments required to service high cost lending. Money isn’t there for the basics, and children
suffer. Preventing harm from consumer lending will improve the lives of thousands of children in New Zealand and support
the aims of the measures to reduce child poverty such as the Families Package”.
“Our services are looking forward to the opportunity to engage with the Select Committee process, telling the stories of
everyday New Zealanders that we work with. We encourage the public to share their stories of how predatory,
irresponsible and high cost lending has impacted on their lives and why changes to the law are necessary for the
financial wellbeing of all New Zealanders”.
“Parts of this industry operate as though they are beyond the law. This Wild West can and will be tamed by a more
The average person using a budget service has a non-mortgage debt of $9700, of which around 45% is owed to finance
companies or banks. 50% are Māori and 12% are Pacific Islanders.