Denying predatory lenders banking services will help put dodgy operators out of business, says Kiwibank.
Since 2011, Kiwibank has been working to support New Zealanders who have been victims of the extortionate interest rates and unfair sales practices.
“There are payday lenders and truck shops in particular preying on the most vulnerable people in our communities,” says Kiwibank’s Group Manager Marketing, Mark Wilkshire.
“The practices and ethics of some of these operators are highly questionable and certainly exploitative. The time has come for action. We have declined to bank organisations that don’t provide fair and transparent information to their customers and have actively off-boarded business customers that come under this umbrella,” he says.
The Government has indicated it wants to change the law relating to consumer credit, with caps on interest rates on short-term loans the top priority.
Kiwibank is inviting others in the New Zealand banking and financial sector to join it in cutting predatory lenders off from accessing services.
“Our stance is to not do any business with these predatory lenders. But to really make change it is crucial that other financial institutions do the same. Kiwibank is taking this stance because we want to be part of a finance system where Kiwis are protected, not trapped by predatory lending.”
Kiwibank’s approach has been endorsed by Ngā Tangata Microfinance Trust, which provides no-interest loans to help vulnerable Kiwis escape the punishing cycle of debt caused by predatory lending practices.
“We need to change the whole structure around fringe lending,” said Trust executive officer Robert Choy.
“Law change is the ultimate goal, but the stance taken by Kiwibank shows banks can be a huge part of the solution now.
“If other banks get on board, we’re a big step closer toward putting these predators out of business for good.”
Kiwibank recently doubled the loan capital it provides to Ngā Tangata Microfinance Trust to $500,000, allowing the social lender to significantly increase the number of no-interest loans it provides to qualifying clients for family well-being and relief from high-interest debt.