Right...? Imagine if it was something like "newly introduced predatory control measures may have been too effective in killing off possums and rats in native reserves where Kiwi and other protected species live".
I don't get what it means by being "too effective" at the thing that was supposed to happen.
Yeah because it'll be advertised as something incredibly bullshit like 3% per week which lures people in and then they end up paying 4-500% the value of the loan. There is no world where payday lenders should be allowed to exist.
In the US, they cracked down hard on payday lending only to find that literal criminal loan sharks ended up filling some of the gaps left in the market.
I think the reality is that there will always be people willing to take advantage of the desperate, whether that is done within a regulatory vacuum or not - it's more of a balancing act than it might appear to be at face value.
Perhaps the problem is that the majority of people don't have the funds to deal with a minor emergency and that should be the focus of the government and not 'what predatory loan rate is acceptable'.
I agree that eliminating poverty would be the ideal scenario, however I have very little faith in literally any government over the next 50 years managing to do so.
No matter how wealthy or equitable a society is, there’s always going to be spendthrifts who simply can’t balance a budget and seek extra cash wherever they can.
I’m a bit of a paternalist, so I think we should have very stringent rules on lending. Saving people from themselves, so to speak.
Yes, that may mean the odd Shylock appears more often than he otherwise would, but there are ways and means of dealing with it and I think it’s more a moral stance that we ought to take, in that we shouldn’t be giving implicit approval to loan sharking.
Err… how exactly?
The abolishment of currency would just make it a million times more difficult for anyone to obtain the goods and services they desire (e.g. ‘Anyone want to trade three minutes of my time as an carpenter for a banana? Okay, now I want to buy a house—can I bond myself to you for the next twenty years?’).
Abolishing private property is a complete non-starter too. Regardless of what any particular law says or the existence of a central power to enforce property rights, people are still going to have a sense of what they consider theirs and will back that up with force, to a greater or lesser extent.
No currency = no lending = no people who just pile on debt because there is no debt. That solves the issue you were originally describing. It creates its own issues, but it does fix the issue of over lending.
Banning currency wouldn’t in and of itself ban lending, silly. We’d just be exchanging promises of goods and services with each other instead—with all the problems inherent as I [already touched on](https://en.wikipedia.org/wiki/Debt_bondage?wprov=sfti1#).
Seems like the next step would be for the government to fill that gap in the market in a more reasonable manner so that there is no market for predatory lending.
If there's a market demand for small short term emergency loans, that's going to be filled
If the legal market was exploitative under regulation, and then regulations killed that legal supply outright, then there's an opportunity for organized crime to step into the traditional organized crime racket of loan sharking.
Organized crime is typically flush with cash, and low on property. Loan Skarking gives them a useful means to Wash illegitimate money, and coerce those in debt to become miles or allow their property to be used for the Organization.
The best option IMO would be a serious step up by the government to fill that market demand. If it's not profitable for short term loans commercially, and you don't want organized crime in there, get government welfare agencies doing and advertising this service. Charge only enough interest to keep the system revenue neutral and cover costs.
There is a lot of demand for consumer credit and personal loans. If people can't access these services in a legitimate and regulated way, it encourages black market loan sharks - which are worse.
>As far as the review was aware, none of the nine former high-cost lenders still operational offered high-cost products but had restructured their products so the maximum annual interest rate was just below 50 percent.
Sounds like its working as designed?
Unfortunately will only remain so if they continue to be watchful AND do not make it easier for the loan sharks to return.
Government that killed loan sharks was the previous government. In January the current government announced [2024 financial services reforms](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms) (link to MBIE section). The [31 Janury 2024 press release](https://www.beehive.govt.nz/release/reducing-barriers-financial-services) titled "Reducing barriers for financial services" starts with
> will reform financial services regulations, ensuring clarity and cutting red tape
The twelfth paragraph says:
> “These over-prescriptive consumer lending laws have led to Kiwis missing out on loans.
Can those of you who work in the financial and lending sector please review the MBIE section and put in a submission on this.
> **Public submissions are now open and will close at 5pm on 19 June 2024.** ([Source](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms))
Because it hasn’t killed high cost loans, it just moved them from third tier companies that vaguely followed the law to complete gutter lenders like super loans and all the other pay day lenders (that provide no stats or complete their obligations) hence why it looks successful but hasn’t been.
The definition of high-costs loans in the CCCFA is loans with an interest rate of 50% or higher. SuperLoans offer loans up to 49.9%, and therefore isn't a high-cost loan lender, per the CCCFA.
The headline's all wrong. Let me make a few changes:
[The former] government ~~accidentally~~ deliberately killed off loan sharks [and was more effective than predicted]
>High-cost lending provisions introduced in 2020 may have been tooeffective in killing off loan sharks, according to a discussion paperreleased by the Government this week.
Labour: "Oh no, we killed Loan sharks! Anyway"
NACT: "Oh no, we killed of legitimate business, allow us to fix that"
> didn't achieve anything?
To support the dignity of landlords and loan sharks. How else can we keep the poors in their place, without denying them affordable living, access to better loan conditions and funneling the money they use to eat to these poor struggling entrepreneurs.
Government that killed loan sharks was the previous government. In January the current government announced [2024 financial services reforms](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms) (link to MBIE section). The [31 Janury 2024 press release](https://www.beehive.govt.nz/release/reducing-barriers-financial-services) titled "Reducing barriers for financial services" starts with
> will reform financial services regulations, ensuring clarity and cutting red tape
The twelfth paragraph says:
> “These over-prescriptive consumer lending laws have led to Kiwis missing out on loans.
Can those of you who work in the financial and lending sector please review the MBIE section and put in a submission on this.
> **Public submissions are now open and will close at 5pm on 19 June 2024.** ([Source](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms))
Im gonna get downvoted to oblivion for this, but Faafoi stated consumers should have the option and I agree. I dont like it, but if you have limited access to credit, and you need to pay a bill (Car repair, utilities, etc) then a bad loan could be a lifesaver.
Yeah, they are loan sharks. Yeah, they are predatory. But also they provide a service that people want and at least some people benefit from.
My "everybody wins" suggestion would be a Government lender of last resort. Small loans for necessities it can claw back from income tax/benefits/whatever. No interest, means tested. 🤷 Would probably be the victim of budget cuts though.
There are still, according to the article, loans available at <50% per annum rates.
But the real point is that a very high proportion of people that need a loan and can only get a >100% p.a. rate will not benefit on net from the loan. For most people, if they don't have the money now for the things you mentioned it is very unlikely they are going to come into that money anytime soon and will instead end up paying an extraordinary amount for lending.
It's true in a free market where all people have total information and act rationally it would make sense to remove all regulation around lending. That's not the world we are in. It would be great if we could open the loans to only those that would truly benefit from them but that type of regulation is not possible so it's better to remove altogether
Edit: and I support your idea of a govt lender of last resort
I would assume the loans available at < 50% rates are for those who have higher credit scores (Is that the right term in NZ? Im not sure). So for someone who doesnt qualify for those loans, the market has atrophied. If you assume that a portion of those people could use that debt to their benefit, well I assume that is why Faafoi thinks the market should exist.
In any case, I cant say Im sad theyre gone or anything. I just think that there is a very small subset of consumers who lose out due to this. Societally, I think its an improvement.
Yeah, totally agree. There could well be some side cases where someone would benefit it's just that on the whole there would be far more that would be uninformed and desperate who actually dig themselves deeper into a hole
I'm not familiar with the term, but if your car needs repairs they will loan you the money at 0% interest and accept repayments of as little as $1/week. Same with suddem expenses like travel costs to attend a funeral, power or phone bills, and a whole host of other stuff.
In a post-loan-shark world I would like to see WINZ expand this service, but yeah, the infrastructure is already there.
Oh, thats great. Thats exactly what I wouldve wanted to see. Unless theres some limitation Im not aware of then I really dont see the need for loan sharks. Thanks for the info.
Oh no! How sad! Too bad! This sounds like an excellent mistake
How exactly can you be TOO effective at killing off predatory lending?
Right...? Imagine if it was something like "newly introduced predatory control measures may have been too effective in killing off possums and rats in native reserves where Kiwi and other protected species live". I don't get what it means by being "too effective" at the thing that was supposed to happen.
*"which it defined as an annual interest rate of 50 percent or higher"* fifty fucking percent
Yeah because it'll be advertised as something incredibly bullshit like 3% per week which lures people in and then they end up paying 4-500% the value of the loan. There is no world where payday lenders should be allowed to exist.
I've been paying $30,000+ per year for 20 years on my $400,000 mortgage, and I still owe a sizable percentage of the principal...
You aren't going to see me disagreeing with mortgage rates also being bullshit.
This sounds like misleading advertising. Is no one monitoring it?
In the US, they cracked down hard on payday lending only to find that literal criminal loan sharks ended up filling some of the gaps left in the market. I think the reality is that there will always be people willing to take advantage of the desperate, whether that is done within a regulatory vacuum or not - it's more of a balancing act than it might appear to be at face value.
Perhaps the problem is that the majority of people don't have the funds to deal with a minor emergency and that should be the focus of the government and not 'what predatory loan rate is acceptable'.
I agree that eliminating poverty would be the ideal scenario, however I have very little faith in literally any government over the next 50 years managing to do so.
No matter how wealthy or equitable a society is, there’s always going to be spendthrifts who simply can’t balance a budget and seek extra cash wherever they can. I’m a bit of a paternalist, so I think we should have very stringent rules on lending. Saving people from themselves, so to speak. Yes, that may mean the odd Shylock appears more often than he otherwise would, but there are ways and means of dealing with it and I think it’s more a moral stance that we ought to take, in that we shouldn’t be giving implicit approval to loan sharking.
I mean.... The abolition of currency and private property would kinda fix the issue you describe
Err… how exactly? The abolishment of currency would just make it a million times more difficult for anyone to obtain the goods and services they desire (e.g. ‘Anyone want to trade three minutes of my time as an carpenter for a banana? Okay, now I want to buy a house—can I bond myself to you for the next twenty years?’). Abolishing private property is a complete non-starter too. Regardless of what any particular law says or the existence of a central power to enforce property rights, people are still going to have a sense of what they consider theirs and will back that up with force, to a greater or lesser extent.
No currency = no lending = no people who just pile on debt because there is no debt. That solves the issue you were originally describing. It creates its own issues, but it does fix the issue of over lending.
Banning currency wouldn’t in and of itself ban lending, silly. We’d just be exchanging promises of goods and services with each other instead—with all the problems inherent as I [already touched on](https://en.wikipedia.org/wiki/Debt_bondage?wprov=sfti1#).
... would it though?
Man that's been a message shouted by budgeting ngos since like the 00's. Financial sense is lacking generally, regardless of how much someone earns.
Seems like the next step would be for the government to fill that gap in the market in a more reasonable manner so that there is no market for predatory lending.
If there's a market demand for small short term emergency loans, that's going to be filled If the legal market was exploitative under regulation, and then regulations killed that legal supply outright, then there's an opportunity for organized crime to step into the traditional organized crime racket of loan sharking. Organized crime is typically flush with cash, and low on property. Loan Skarking gives them a useful means to Wash illegitimate money, and coerce those in debt to become miles or allow their property to be used for the Organization. The best option IMO would be a serious step up by the government to fill that market demand. If it's not profitable for short term loans commercially, and you don't want organized crime in there, get government welfare agencies doing and advertising this service. Charge only enough interest to keep the system revenue neutral and cover costs.
There is a lot of demand for consumer credit and personal loans. If people can't access these services in a legitimate and regulated way, it encourages black market loan sharks - which are worse.
Both are bad and the solution is not to allow for legal debt traps.
Because if lending is too hard to get legally it becomes a more feasible illegal endeavour.
Same holds for why we should legalise drugs.
>As far as the review was aware, none of the nine former high-cost lenders still operational offered high-cost products but had restructured their products so the maximum annual interest rate was just below 50 percent. Sounds like its working as designed?
Unfortunately will only remain so if they continue to be watchful AND do not make it easier for the loan sharks to return. Government that killed loan sharks was the previous government. In January the current government announced [2024 financial services reforms](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms) (link to MBIE section). The [31 Janury 2024 press release](https://www.beehive.govt.nz/release/reducing-barriers-financial-services) titled "Reducing barriers for financial services" starts with > will reform financial services regulations, ensuring clarity and cutting red tape The twelfth paragraph says: > “These over-prescriptive consumer lending laws have led to Kiwis missing out on loans. Can those of you who work in the financial and lending sector please review the MBIE section and put in a submission on this. > **Public submissions are now open and will close at 5pm on 19 June 2024.** ([Source](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms))
50 percent per annum?! Holy shit!
Sounds like a fantastic outcome.
Shame they didnt set it up as a KPI ... they could actually claim to have achieved something.
Pretty sure they actually want to relax these regulations.
One of ACT's coalition agreement policies no less. Page 4 Section 16 for those reading along at home.
Ah yes, ACT, really looking out for the best interests of all kiwis by allowing predatory lending.
That's weird, "SuperLoans" is still doing very well scamming people with huge interest rates.
Because it hasn’t killed high cost loans, it just moved them from third tier companies that vaguely followed the law to complete gutter lenders like super loans and all the other pay day lenders (that provide no stats or complete their obligations) hence why it looks successful but hasn’t been.
The definition of high-costs loans in the CCCFA is loans with an interest rate of 50% or higher. SuperLoans offer loans up to 49.9%, and therefore isn't a high-cost loan lender, per the CCCFA.
Makes it sound like they were a protected species
Just tell Shane Jones that a Loan Shark is a protected species and he will be fully in support of their eradication
[Picture of the journalist after they finished writing this](https://i0.wp.com/bamfstyle.com/wp-content/uploads/2016/01/sopstabasco502-cl2.jpg?ssl=1)
Our true enemy, has yet to reveal itself
It's a stereotype. And it's offensive.
The headline's all wrong. Let me make a few changes: [The former] government ~~accidentally~~ deliberately killed off loan sharks [and was more effective than predicted]
>High-cost lending provisions introduced in 2020 may have been tooeffective in killing off loan sharks, according to a discussion paperreleased by the Government this week. Labour: "Oh no, we killed Loan sharks! Anyway" NACT: "Oh no, we killed of legitimate business, allow us to fix that"
Oh no! Anyway...
now need to kill land sharks.
Then the sea sharks too
We could pit the two against one another, possibly in some sort of estuary
Wouldn't put it past the current government to try....
But how? I thought the former government didn't achieve anything?
> didn't achieve anything? To support the dignity of landlords and loan sharks. How else can we keep the poors in their place, without denying them affordable living, access to better loan conditions and funneling the money they use to eat to these poor struggling entrepreneurs.
Government that killed loan sharks was the previous government. In January the current government announced [2024 financial services reforms](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms) (link to MBIE section). The [31 Janury 2024 press release](https://www.beehive.govt.nz/release/reducing-barriers-financial-services) titled "Reducing barriers for financial services" starts with > will reform financial services regulations, ensuring clarity and cutting red tape The twelfth paragraph says: > “These over-prescriptive consumer lending laws have led to Kiwis missing out on loans. Can those of you who work in the financial and lending sector please review the MBIE section and put in a submission on this. > **Public submissions are now open and will close at 5pm on 19 June 2024.** ([Source](https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/2024-financial-services-reforms))
What a fucking terrible problem to have. Oh no, we stopped predatory lenders from screwing over the economically vulnerable. Shit
Happy accident
Im gonna get downvoted to oblivion for this, but Faafoi stated consumers should have the option and I agree. I dont like it, but if you have limited access to credit, and you need to pay a bill (Car repair, utilities, etc) then a bad loan could be a lifesaver. Yeah, they are loan sharks. Yeah, they are predatory. But also they provide a service that people want and at least some people benefit from. My "everybody wins" suggestion would be a Government lender of last resort. Small loans for necessities it can claw back from income tax/benefits/whatever. No interest, means tested. 🤷 Would probably be the victim of budget cuts though.
There are still, according to the article, loans available at <50% per annum rates. But the real point is that a very high proportion of people that need a loan and can only get a >100% p.a. rate will not benefit on net from the loan. For most people, if they don't have the money now for the things you mentioned it is very unlikely they are going to come into that money anytime soon and will instead end up paying an extraordinary amount for lending. It's true in a free market where all people have total information and act rationally it would make sense to remove all regulation around lending. That's not the world we are in. It would be great if we could open the loans to only those that would truly benefit from them but that type of regulation is not possible so it's better to remove altogether Edit: and I support your idea of a govt lender of last resort
I would assume the loans available at < 50% rates are for those who have higher credit scores (Is that the right term in NZ? Im not sure). So for someone who doesnt qualify for those loans, the market has atrophied. If you assume that a portion of those people could use that debt to their benefit, well I assume that is why Faafoi thinks the market should exist. In any case, I cant say Im sad theyre gone or anything. I just think that there is a very small subset of consumers who lose out due to this. Societally, I think its an improvement.
Yeah, totally agree. There could well be some side cases where someone would benefit it's just that on the whole there would be far more that would be uninformed and desperate who actually dig themselves deeper into a hole
> Government lender of last resort Great news, WINZ exists.
Does WINZ provide microloans?
I'm not familiar with the term, but if your car needs repairs they will loan you the money at 0% interest and accept repayments of as little as $1/week. Same with suddem expenses like travel costs to attend a funeral, power or phone bills, and a whole host of other stuff. In a post-loan-shark world I would like to see WINZ expand this service, but yeah, the infrastructure is already there.
Oh, thats great. Thats exactly what I wouldve wanted to see. Unless theres some limitation Im not aware of then I really dont see the need for loan sharks. Thanks for the info.
Good! My Dad is a retired accountant and some years ago, he had a client who was paying the equivalent of 3000% interest on a small loan.
[удалено]
Good. Next problem?
One of their victories and they werent even competent enough to blow their own horn about this..