FinCap calls for strong regulation to tackle unfair debt collection practices in Aotearoa, following the release of a new research report today.
Overwhelming bombardment via phone calls, texts, emails and in-person visits along with unpredictable but substantial charges have been revealed among a range of nefarious practices on the part of debt collectors.
It is reported that these may continue even though it is clear that they will not help break an unmanageable debt cycle for those who are already facing financial difficulties.
Victoria Stace, Principal Lecturer, University of Victoria, and Liz Gordon, Pukeko Research, partnered with FinCap for the Debt Collection in Aotearoa from a Financial Mentors Report Perspective .
Financial mentors were asked about the people they support who have experience with debt collection.
Some of the key findings show that the tactics used by debt collectors can seriously harm indebted whānau, that the parameters of the foreclosure order process in our courts need to be reformed, and that irresponsible lending continues to be a problem.
It also highlights the vital role financial mentors play in defending their clients against unfair practices.
“I don’t know how some people survive the deluge of text messages, emails, phone calls and letters in the mail,” reports a financial mentor.
“But some people don’t survive it, which is why they come to us in tears and end up becoming insolvent just so they don’t have that pressure.”
For example, a customer might have a $ 500 utility bill that was incurred years ago, but then it goes to debt collection and it’s now a debt of $ 1,500, and the customer doesn’t. has no way to pay for this.
FinCap chief executive Ruth Smithers said whānau facing difficulties should not be faced with unfair debt collection, which makes matters worse.
“With a lack of oversight for debt collection in Aotearoa, there are totally unacceptable behaviors and reckless processes that go unchecked. People who are already struggling are against it,” she said.
“We need changes to the Fair Trading Act that lead to strong regulatory oversight, clear industry guidance and effective protections for people looking to get back on their feet, when in debt.”
FinCap also calls for a judgment-proof debtor policy to prevent up to 40% of people’s benefits being taken away by garnishment orders before they reach their bank accounts to pay debt. food.
“Financial mentors do a great job of keeping debt from getting out of hand, but we’re only dealing with the tip of the iceberg – we need strong regulation for fair practices every day,” says Ruth.
“We intend to work with the government to find a solution to the issues raised in this report.”
FinCap also shared previous research related to debt collection on its website:
Debt Collection in New Zealand: A Case Review of the Adoption of Guidelines, Inspired by the Australian Debt Collection Guidelines, to Address Debt Collection Agent Misconduct
Towards a Fairer Consumer Credit Market: A Study of the Problems of the New Zealand Consumer Credit Market and Proposals for Reform: Problems of Application
Towards a fairer consumer credit market: study of the challenges of the consumer credit market in New Zealand and reform proposals: debt collection
If you or someone you know needs more help with debt collection, contact the MoneyTalks Help Line on 0800 345 123.
Note: FinCap is the umbrella organization for 900 financial mentors across the country.
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