Crackdown on piranha-like mobile traders and lenders welcomed, but no silver bullet

Thursday, 4 June 2020

New measures to protect vulnerable communities from predatory lenders and mobile traders have been welcomed but organisations providing budget advice say more can be done to prevent financial hardship.

Porirua Citizens Advice Bureau (CAB) chairwoman Anne Goodman said any measure to quell predatory behaviour by mobile truck-shops was good news.

'They are like piranha fish cruising the poorest areas.'

While some sold goods at massively inflated prices, others charged high interest rates and some did both.

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She said the CAB received people seeking budget advice after dealing with such businesses on a nearly daily basis.

People with bad credit ratings often turned to using the companies because no one else would lend to them, while others accessed KiwiSaver accounts to clear debt, she said.

Since June 1, mobile traders have had to make affordability assessments before agreeing to sell any goods on credit in accordance with the Credit Contracts and Consumer Finance Act.

With some lenders having previously charged interest rates of up to 600 per cent, a cap of 0.8 per cent per day was also introduced.

While the protective measures were a step in the right direction, Goodman said more needed to be done to make financing more accessible.

Salvation Army community finance co-ordinator Siobhan Deans said 'the reality is people can't access credit. They are forced to go to high interest lenders. We need to fill this need with a fair and affordable option.'

She said the regulations could reduce harm but warned dangerous debt could be accrued even with the new cap.

Last year the Salvation Army launched its own mobile shops, offering reasonably priced goods, to disrupt the market.

Deans said the number of mobile trading companies had reduced in the last few years but said they were still present in low-socioeconomic areas.