A review into consumer finance law shows many mobile truck shop lenders are still flouting regulations, the Consumer Affairs Minister says.
Minister of Consumer Affairs Kris Faafoi. Photo: RNZ / Cole Eastham-Farrelly
Minister of Consumer Affairs Kris Faafoi met with budgeting groups in Gisborne yesterday as part of a review of the Credit Contracts and Consumer Finance Act (CCCFA).
Many truck shops were not abiding by the law, so harsher enforcement could curb this, Mr Faafoi said
"There are some truck shop operators that claim they are responsible lenders and they'll get the chance to have their say during the process as well."
The review into lending practices - not just mobile truck shops - was already under way. It sought to tighten rules on product disclosures, loan assessment practices and responsible lending.
Mobile truck shops operate in most parts of the country and sell goods such as technology, toys, food and clothing.
Gisborne Budget Service manager Lynda Markie said goods were often sold at higher prices than shops, and drivers targeted low socio-economic areas and often used unethical sales tactics.
"When you are relaxing in your own home and someone's knocking on the door you are more vulnerable and we've heard stories from clients where the children have opened the door and the salesperson has tried to entice a sale through the children," she said.
In June 2015 the CCCFA was changed. It included a provision where lenders had to be satisfied the borrower would be able to make repayments without suffering financial hardship.
"The changes that were made in 2015 were aimed at making life better for vulnerable consumers and tightening up rules for lenders but what we've seen is the hurt still continues," Mr Faafoi said.
"We want to make sure [consumers] have other options, other places to borrow, some financial capability as well but importantly make sure we get the legislation right so they are protected."
"At the end of the year we'd hope to have some solid policy options on the table ready for legislation to be introduced early next year," he said.
In 2014 the Commerce Commission began investigating mobile traders.
The biggest fine of $330,000 was handed out in April to Mobile Shop. The Commission said the prosecution was the last of its initial report from 2014/2015 but it would still be actively enforcing compliance.