Unsecured debt complaints soar

WELLINGTON: Complaints about unsecured debt have more than doubled in the past year, as consumers struggle to repay loans in the face of rising living costs.

The dispute resolution service, Financial Services Complaints, said it was also receiving about 20 complaints a week against nonbank lenders — double the number compared with 12 months ago.

The organisation said it was the biggest increase since it started 11 years ago.

Chief executive Susan Taylor said the majority of complaints were from people finding it hard to meet payments.

‘‘They are wanting the lender to look at putting in some sort of relief package for them. Occasionally, underlying the hardship complaint, there may also be a complaint that the lending was irresponsible in the first place.

‘‘Some people may say the lender should not have advanced this loan because [they were] always going to struggle to repay it.’’

But consumers often complained because their circumstances had changed due to increased costs and reduced working hours, she said.

If consumers were in hardship, they needed to talk to their lender as soon as possible.

‘‘Borrowers need to be aware that if the lender is trying to contact them and they are in arrears, it is better that they have these conversations earlier rather than later.

‘‘We understand that it can be difficult to have these conversations. However, as time goes on, the options diminish and you do not want to have to pay default fees and accrued interest, both of which will escalate the longer it takes to address the issue.’’

For lenders, the Responsible Lending Code outlined steps for them to take when borrowers were in hardship.

Lenders had a responsibility to ‘‘look out’’ for people whom they might see fall into hardship, Ms Taylor said. — RNZ