New legislation in New Zealand will hopefully improve the lives of Samoan families across the country, said chairperson of the Auckland Council Māngere-Ōtāhuhu local board Lemauga Lydia Sosene.
In October 2018, the NZ Government revealed tough measures on predatory lenders, including an interest cap of 100 per cent of the loan.
The new measures will come into effect from 2020.
High and never ending interest rates let payday lenders and the like “get away with murder,” Lemauga said.
“So, you’re trying to pay off your debt and your weekly repayment is daylight robbery when a high percentage of it is interest alone.”
“The industry also has to stop and look at the effects of the service they are providing to their customers.”
Under the review of the Credit, Contracts and Consumer Finance Act, borrowers will never pay more than twice what they borrowed, which should help end spiralling debt.
“As well as the interest rate cap, the measures include a ‘fit and proper person’ test for mobile traders and the heads of companies offering consumer credit contracts. There will be tougher penalties for irresponsible lending and clearer responsible lending requirements,” Radio New Zealand reported.
Samoan families, among other Pacific peoples are most affected by predatory lending. The New Zealand Herald’s Warren Gamble reported on the growing problem.
“A five-minute stroll in the South Auckland centre will take you past at least 10 businesses wanting to give you cold, hard cash,” he wrote.
“Their signs, in English and Samoan, beckon: Instant Cash, Quick Loans $20 to $1000, Use Your TV, Stereo as Security, No Credit Check, Easy Terms.”
Lemauga said she sees first-hand the issues her people face, where families can’t lend from banks because they are already in too much debt.
“One of the things we’ve been assisting with in Māngere-Ōtāhuhu is with a lot of budget advisors,” she said.
“In fact quite a lot of experienced Samoan workers in those budget advisories so they get it, you can’t go in and say oh, I have all these fa’alavelave, I have all these things to do for church.”
She said often the response is to tell people to stop turning to predatory lenders, but not everyone has a choice. But local government can help, and tries to.
“We need to assist people’s decision making and really help our people get out of debt.”
“It’s going to be a good thing in terms of the legislation really coming down hard on the loan sharks who have been getting away with murder, charging very high interest.”
But financial education and familial support still plays a role in getting people out of debt.
“Is there another way? Rather than going to a loan shark, is there anyone in their extended aiga that could help through this period? I don’t know,” Lemauga said.
“I am a true believe in financial education. To understand how your dollar works, that you can only slice it up so many ways, and sometimes, you just have to go without.”
Manukau city councillor Efeso Collins said he welcomed the new measures.
“Loan sharks are an indictment on a fair and just society,” he told Stuff reporter Jackson Thomas.
“They prey on financially unstable families and make me sick. Maori and Pacific families do all they can to share and shoulder the financial burdens as a collective.”
“But loan sharks abuse our cultural heritage.”