At last, sanitising daylight on the ‘bottom-feeders’
OPINION:‘‘ The rich ruleth over the poor, and the borrower is servant to the lender.’’ King James Bible – the Book of Proverbs 22:7
The tale of 86-year-old grandmother Regine Du Villier went viral two weeks ago. On her way to the doctors, she got crook and stopped to find help.
In the time it took her to get assistance, a parking services company zeroed in on her hatchback and shackled up a wheelclamp to the front right tyre. When the ailing and confused granny returned to the car the non-uniformed clamper demanded $200. Du Villier didn’t have $200 and things went south pretty quickly after that.
This is where the police got involved. Fortunately the West Auckland coppers persuaded Elite Parking Services to see reason and the fine was finally waived.
Transport Minister Phil Twyford has consequently said wheel clamping needs to be made illegal and is keen to see legislation that would ban or severely restrict the rapacious practice. And not before time.
With the support of Consumer Affairs Minister Kris Faafoi it appears likely that we will see a law change that will place formal restrictions on the industry. Twyford said he regards the wheel clamping industry as predators and bottom-feeders.
It’s a good description and one that also came to mind when professional director and Booktown backer Pete Monk told me about the experience he’d had with short-term loan company Superloans.
A mate of Pete’s was suffering from toothache and needed some money to get some urgent dental work and payday was some distance off. Having an existing loan with Superloans, he was on the TXT spam list for a service they call ‘‘top ups’’.
Pete’s mate succumbed to a topup offer to help pay the dental bill. The cash top up was $267.70, on top of which was a $45 top-up fee, a $50 admin fee and a finance charge that worked out to almost 150 per cent per annum.
Put this together and he would have been paying back $657. This is on top of an initial unpaid balance, so he would be paying back $155 per fortnight for almost seven months. A pretty corrosive recipe for a bluecollar worker with two kids and a wedding on the horizon.
The interesting part is that Superloans also runs a loyalty programme where you get points for taking on debt. They call it Superscore. More debt, better Superscore.
Think of it like Air New Zealand Airpoints, except you can’t fly to Hawaii on Superscore points.
Rather it just allows you to borrow more money.
Good bloke that he is, Pete ended up buying out the debt and settling it for his mate.
However, from what I can gather, Superloans is far from the worst across the yeasty third-tier money lenders. An industry made infamous by Shakespeare’s Shylock character in The Merchant of Venice.
The Credit Contracts and Consumer Finance Amendment Act 2014 and the Responsible Lending Code were meant to solve all this. They came into force in 2015 and include changes to lender responsibility principles, repossession of consumer goods, and amendments to some disclosure rules.
This law was meant to protect customers when they borrow money and covers a broad range of transactions including consumer loans, leases and buy-back transactions. However, no limits are set on charges, and the code itself is non-binding on loan companies and fails to provide a safe harbour.
Meanwhile, nowhere are any caps set on fees or interest rates. This sees interest rates that can be as much as 1.5 per cent to 2 per cent, per day.
This contrasts with Great Britain where payday loan store investigations have led to stringent interest rate caps on loans. According to the Financial Conduct Authority this has saved lowincome Britons millions.
It also contrasts with Australia, where monthly interest is capped at 4 per cent, establishment fees are capped at 20 per cent of the amount borrowed and payday loans of less than 15 days are banned.
The good news is that the Labourled Government has voiced commitment to putting interest rate caps on payday loans. As well as looking into wheel clamping, Consumer Affairs Minister Faafoi has told Ministry of Business, Innovation and Employment officials to consider how low New Zealand’s payday loan rate caps should be set.
Not only would such moves be consumer-centric and fundamentally good, they’d also help shine some sanitising daylight into a world where there are no limits on the extent to which a consumer can be shafted.
A world where the calculating prey upon those with little choice.
A world with considerably higher downsides than having your old Corolla clamped.
Mike ‘‘MOD’’ O’Donnell is a professional director and writer. His Twitter handle is @modsta and he’s learnt a lot from the Book of Proverbs.