BNZ and partners celebrate five years of Community Finance programme
Bank of New Zealand (BNZ) has reaffirmed its commitment to disrupt predatory lending practices in New Zealand, ramping up its involvement in Community Finance programmes and pledging to provide millions more dollars in no and low interest lending to tens of thousands of Kiwis over the next five years.
BNZ has boosted funding and resourcing for the Community Finance programme and will double the number of community loan workers issuing no and low interest loans.
BNZ Chief Executive, Angie Mentis, says, “We are on a mission to disrupt predatory lending and today is another important step in the right direction.
“We want to rid our communities of loan sharks who prey on our most vulnerable by offering a much better alternative – no and low interest loans, and a conversation about money that sets Kiwis up to manage their money and improve their quality of life,” Mentis says.
In its first five years, Community Finance has lent nearly $5 million to over 1,700 families with estimated savings of $2.46 million in interest and fees.
Research1 also shows that community finance loans are having a broad and positive impact helping New Zealanders pay off debt faster (46%), save more money (40%) and understand their finances better (54%). Community Finance is also having an impact on employment with the proportion of participants employed increasing 10% after receiving a Community Finance loan verses those that didn’t.
Mentis says, “Over the past five years, Community finance has helped more than 1,700 families get access to low and no interest lending. It’s a good start, but a drop in the ocean considering the 300,000 New Zealanders that we estimate are stuck using third and fourth tier lenders.
“For this reason we’re fast tracking our plans for Community Finance and looking to help tens of thousands more individuals and families over the coming years.
“In partnership with Good Shepherd New Zealand, we’re working on a debt consolidation programme that will help pry people out of unsustainable debt to loan sharks and lift them out of the cycle of debt. We also know our customers want access to appropriate financial support through different channels, such as over the phone and via a digital solution, and we are looking at a range of ways to make our services available,” Mentis says.
Good Shops put squeeze on mobile traders
As part of BNZ’s focus on tackling predatory lenders and traders, BNZ is also taking aim at mobile traders offering products at extortionate prices.
Mentis says, “Just as loan sharks pray on desperation and convenience, there are mobile shops trawling neighbourhoods across New Zealand offering $45 cans of Milo to anxious parents who simply want to feed and clothe their kids – it’s disgraceful.
“In partnership with The Salvation Army, government and other great New Zealand organisations, the Good Shop visits vulnerable communities, offering necessary and everyday items at everyday prices. It is a viable alternative to the overpriced offerings from predatory traders. We have two operating presently in Porirua and Manurewa, and hope to launch another soon,” says Mentis.
“Taking on the predatory lending market is a constant battle. We are tackling this issue on multiple fronts, disrupting the loan sharks and mobile traders and driving them out of communities, and working with government on strengthening regulatory frameworks for lending,” says Mentis.
1 Evaluation of the Community Finance Programme, Malatest International, 2018