Commerce Minister Kris Faafoi went to Porirua to meet with victims of predatory lending, after releasing a discussion paper outlining the findings from the review of the Credit Contracts and Consumer Finance Act. / Video by Mark Mitchell
Three mums struggling under almost $150,000 of debt are among the homeless Auckland families falling prey to loan sharks, marae advocates say.
Te Puea Memorial Marae has taken in more than 30 homeless families in the past year to help them find housing and get their lives back on track.
But turning families' lives around is much harder when they are under a mountain of debt, marae chairman Hurimoana Dennis says.
He told of three mums seeking the marae's help, who were all aged in their 30s, had 14 children between them and 30 debts totalling about $144,000.
More than half the debts were to South Auckland finance companies charging high interest and a raft of default payment fees on goods, such as cars, fridges and clothes.
"Parents need to take some blame for the decision-making," Dennis said.
"But through our ongoing dealings with homeless whānau here, there is always an element of avoidability."
Dennis believes a credit check would make it plain the families could not afford the goods they were trying to buy and that companies were putting profits over ethical lending - a view backed by Commerce and Consumer Affairs Minister Kris Faafoi.
Faafoi said yesterday it was becoming clear amendments in 2015 aimed at tightening the Credit Contracts and Consumer Finance Act hadn't gone far enough, and it was time to "finish the job".
He released a Government discussion paper suggesting capped interest rates and fees and increased penalties for irresponsible lending could be possible measures to crack down on loan sharks.
"I've spoken with people who have been given loans that are clearly unaffordable for them, and others who have been lashed with huge penalties and fees," Faafoi said.
"These practices trap people and whānau in an appalling debt spiral that is very difficult to get out of."
Kris Faafoi said it was becoming clear amendments in 2015 aimed at tightening the Credit Contracts and Consumer Finance Act hadn't gone far enough. Photo / Mark Mitchell
Porirua resident Lisi Taulapapa was among those at the release of the discussion paper yesterday, telling how she fell victim to mobile trading trucks and their attractive sales pitch of taking goods home now and paying later.
"That truck - it's like for me I can get it straight away, but you never know [there is] a lot of interest behind getting whatever you want, like those perfumes, clothes," she said.
In South Auckland, Te Puea's Dennis named six "predatory" lenders and retailers that families at the marae were regularly in debt to, including Greenfield Global, which operated as a mobile trader called KiwiOwn.
The Commerce Commission said it investigated and issued a warning to KiwiOwn late last year and had also received complaints against four of the six companies named by Te Puea.
KiwiOwn did not respond to the Herald by deadline, but a Commission spokeswoman said its investigation led the company to refund nearly $110,000 in credit and default fees to customers.
The Commission's warning letter to the mobile trader said it was likely KiwiOwn had misled customers about their rights and failed to disclose key information about credit contracts.
For families at Te Puea, meanwhile, debt remains a constant problem and "one of the main agitators towards becoming homeless, and in some cases, remaining homeless", Dennis said.
"Putting it bluntly, we don't know how these people have coped let alone supported the many children they all have," he said.
SNAPSHOT OF THREE TE PUEA MUMS:
A 31-year-old Māori mother of six, now living with a partner: • Has a total debt of about $50,000 from 13 debts • Includes eight debts to finance companies, three for utilities and two to government departments • A largest single debt of $16,800 to Go Car Finance with $85 per week repayments
A 33-year-old Māori single mum of five: • Has a total debt of about $19,000 from 10 debts • Includes five to finance companies, three to other sources, such as medical, SKY TV and a friend, and two to government departments • Largest single debt of $11,000 to Go Car Finance, which she is no longer repaying as the car is not in her possession
A 30-year-old Māori single mum of three: • Has total debt of about $75,000 from seven debts • Includes four to finance companies, one for rent arrears and two to government departments • Largest single debt is $41,400 student loan, which she is not required to repay immediately
