The Salvation Army welcomes today’s announcement of a cap on interest rates.
However, we still maintain it doesn’t go far enough to protect already vulnerable people: 0.8 per cent interest per day can equate to an annual interest rate of 290 per cent – a huge financial burden for whanau.
We are pleased that these Credit Contract and Consumer Finance Act (CCCFA) reforms will apply to predatory lenders across all sectors, including mobile shopping trucks.
The Salvation Army believes the best way to safeguard vulnerable people from predatory lenders is to ban all mobile traders. We are pleased that these businesses, who have previously not been the subject to lending restrictions, will now have to ensure their customers are able to repay their loans, and inform them of their obligations and rights before entering into a contract with them.
While these changes will help restrict the highest cost lending, it is crucial that we provide fair and affordable alternatives for people. TSA is already offering services in this area, but an increase in funding is required to enable these services to help more New Zealanders.
We welcome a review of the Credit Contract and Consumer Finance Act (CCCFA) in three years’ time.