Earlier this year FinCap was invited to submit a response to a targeted consultation on potential changes to the Fair Trading Act. Now that a decision to increase penalties in the Act has been announced, we can publish our submission in support of this decision.

FinCap has long recommended a clarification on what defines prohibited harassment, as well as introducing penalties for harassment and coercion. However, we also recommended further action to create strong and detailed guidance on what the legislation means when a debt collector approaches an alleged debtor.

In a recent open letter to Government from consumer advocacy groups, FinCap's Chief Executive, Fleur Howard said: "Currently, a debt collector wouldn't be penalised for harassing or coercing someone who is unable to meet unreasonable payment demands. Conduct like this can mean it's game over for someone who is trying to keep food on the table without a KiwiSaver hardship withdrawal or insolvency procedure."

Open letter: Consumer groups urge Government: make the Fair Trading Act fairer.

As further public consultation on the changes is sought, FinCap will continue to recommend the need to ensure regulators have the right tools to deter or address unreasonable debt collection conduct. This is vital to reducing the risk of harm from the debt hangover many whānau are facing now, with the cost-of-living crisis, and will continue to have in years to come.

Read FinCap's Submission on Fair Trading Act targeted consultation paper here.