In the light of newly published findings in a growing body of research, FinCap renews its calls for regulation to prevent unacceptable debt collection practices in Aotearoa.
Regulating Debt Collection Practices in New Zealand: Options for Reform is a research paper authored by Tallara Daldorf and Victoria Stace from Victoria University of Wellington Te Herenga Waka. The paper explores the makeup of the debt collection industry in Aotearoa, compares our regulatory framework and points out the gaps with comparative countries. The research recommends actions to ensure fair conduct in debt collection practices.
FinCap senior policy advisor, Jake Lilley noted the significant distress that regularly arises because of unacceptable debt collection practices:
“This Christmas, many whānau will again be carrying the burden of unmanageable debt with new cost-of-living pressures stacked on top.”
“The research paper reminds us once more that action is needed so Aotearoa no longer accepts debt collectors expecting whānau to go without food to pay.”
“Our laws in this space are incoherent and can leave financial mentors stuck in a minefield and unable to prevent harassment, fees on fees and unreasonable demands for whānau who simply cannot pay.”
“The research highlights the fact that we lag behind Australia and the United Kingdom.
Updates to rules and penalties in our Fair Trading Act, as well as requirements that all debt collectors be part of a dispute resolution scheme that allows debtors to access free and independent dispute resolution are simple changes that could make a big difference.”
FinCap policy advisor, Janeka Rutherford-Busck also noted:
“The research highlights that in some cases the same debt collection businesses are collecting debt for government.”
“We know there is work going on in the background to reconsider inconsistency as to how government creates and collects debt.
“We welcome this work from Government as we see that there is an urgent need to ensure that all are focused on prosperity rather than punishment when whānau cannot pay.”
The full paper is published here.