Nail dodgy lenders, credit union urges

NZCU Baywide chief executive Gavin Earle wants to see swift government action to shut down lenders who are acting outside the law.
Mr Earle has taken up the challenge issued by Consumer Affairs Minister Simon Power at a one-day financial services sector summit in Auckland this week to look at ways of ending unscrupulous lending practices and improve people's financial literacy.
Mr Earle said the largest credit union in New Zealand was concerned about the number of third-tier lenders and their advertising methods.
"I was appalled to hear that 35 per cent to 40 per cent of third-tier lenders appear to have not registered as Financial Service Providers, as required by law," he said.
"From my experience, there is a real problem that no single government agency has been willing to take responsibility for holding these lenders to account.
"Mr Power certainly took on board our concerns and has vowed to make this a priority."
Advertising by some lenders targeted those without an adequate credit history, such as low-income earners, beneficiaries and young people, emphasising the ease of third-tier loans.
Research also showed some did not disclose all the borrowing costs.
"Many of these unscrupulous lenders operate irresponsibly by targeting vulnerable people and getting them into debt way over their heads," Mr Earle said.
"Predatory lenders tend to provide instant approval without taking the time to assess the person's situation to ensure they have the means to repay the debt.
"We heard from various community groups who see the damage that spiralling debt does to families, with some 50,000 children relying on food parcels last year. This is an appalling situation and as a society we have a responsibility to protect these people."
A wide range of suggestions from the summit had been put forward for Mr Power to consider.
"I thought a couple of particularly good ideas included introducing a mandatory code of conduct across all lenders, declaring loan contracts from unregistered lenders invalid and ensuring all borrowers receive a simple one-page fact sheet of key loan information.
"I was particularly impressed with the resolve that Mr Power showed at the summit to tackle the key issues head on, and his promise to take swift and decisive action. I look forward to appropriate initiatives being put in place very shortly."