Yet another review of the regulations

Commerce Minister Andrew Bayly announced today that his government intends to reduce barriers faced by financial service providers, including removing the Commerce Commission's oversight role and shifting it to the Financial Markets Authority.

Who wins with this announcement?

While these changes look like good news for lenders, I don't see it helping the hard-working front-line Kiwis who are trying their best to get out of debt (rather than not being able to get in it!) 

Andrew Bayly says: “These over-prescriptive consumer lending laws have led to Kiwis missing out on loans.’’

With the latest Centrix report indicating a 3% increase in credit demand, and record Kiwisaver withdrawals and loan arrears I’m not sure those who can afford loans have been missing out.

Our view on the state of debt for Kiwis

At Money Sweetspot the only thing we do is help people out of loans that are keeping them in debt – interest rates of over 30% are the norm for the people we help.

Many have been in debt for years, paying the minimum on their credit card repayments or getting ongoing top ups to their facilities until at some point someone, eventually, says no.

Now, this isn’t all on the consumer –let's not make them the villain in this. Inflation and interest rates have hitKiwis' pockets hard and there’s only so much they can control.

In December we were only able to approve 3% of applications from Kiwis who were motivated to financially reset.

A reset with us means avoiding new debt, staying on track and engaging in financial education. The vast majority of those declines were because families are already over-indebted and unable to meet even our lower repayments affordably.

Our model refers those we decline to the nationwide network of financial mentors through Money Talks and Debt Fix and microfinance providers such as Good Shepherd who are experience and committed to helping people with their finances.

Unfortunately, many of those services are overwhelmed with requests, resulting in wait times of weeks, or a no to those in desperate need of help.

With funding for those services up in the air, and potential cuts to public funding of around 7% per department I’m genuinely concerned that motivated Kiwis who are reaching out for help, who include front line workers –our police, nurses, health workers, prison officers, and teachers – will have nowhere to turn, resulting in increased financial distress which will undoubtedly place further pressure on our families, communities, and public system.

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