Kiwibank will no longer deal with predatory lenders, according to a new press release.
Extending banking services to predatory lenders keeps them in business and exposes vulnerable New Zealanders to inflated interest rates and unfair sales practices, according to Kiwibank.
The bank is now inviting others in the banking and financial sector to help cut these lenders off from accessing services.
“There are payday lenders and truck shops in particular preying on the most vulnerable people in our communities,” says marketing group manager Mark Wilkshire. “The practices and ethics of some of these operators are highly questionable and certainly exploitative. The time has come for action.”
Kiwibank is declining to bank organisations that don’t offer ‘fair and transparent information to their customers’ and has actively cut ties with business customers that have failed to do so.
“Our stance is not to do any business with these predatory lenders,” says Wilkshire. “But to really make change, it is crucial that other financial institutions do the same. Kiwibank is taking this stance because we want to be part of a finance system where Kiwis are protected, not trapped by predatory lending.”
Kiwibank’s stance has been endorsed by Ngā Tangata Microfinance Trust, which offers no-interest loans to help vulnerable people break out of the harsh cycle of debt caused by predatory lending practices.
According to Trust executive officer Robert Choy, the entire structure around fringe lending needs to change.
“Law change is the ultimate goal,” says Choy. “But the stance taken by Kiwibank shows banks can be a huge part of the solution now. If other banks get on board, we’re a big step closer toward putting these predators out of business for good.”