Sasha Lockley: Money Sweetspot co-founder and CEO on the Government's changes to the Responsible Lending Code

There's growing concerns from expert as the Government rolls back some restrictions needed to take out a loan.

From today, The Government has removed affordability regulations from the Credit Contracts and Consumer Finance Act and updated the Responsible Lending Code.

Money Sweetspot co-founder and CEO Sasha Lockley says relaxing these requirements means more people are at risk of getting into debt that they can't afford to pay back.

"People believe what banks and finance companies tell them around affordability...and if you go to some of the bad actors in this financial system, they may say - yes, absolutely you can afford it, when actually, people can't."

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Episode Transcript

Speaker 1 (00:00):
So there are a whole load of moves from the
government today and one of the latest is make it
easier to access loans. And that's with the Credit Contracts
and Consumer Finance Act, otherwise known as the Triple CFA,
and that's officially been scrapped. That's the one with the bags,
asked you how much smashed avocada, you ate, and then
decided to take away your loan. Now, while some are
celebrating about the home loan side of it, others worry

(00:23):
about what it might mean for people accessing smaller loans
who were always affected the most in the first place.
So Sasha Lockley is the chief executive of Social Lender
Money Social Lender Money sweet Spot, and she joins me now, sessha, Hello, Hello,
how are you very good? Okay? Is this good news
for people wanting first homes, first.

Speaker 2 (00:44):
Up, first homes. Yes, absolutely, demand's going to go up.
I like your analogy. We are seeing the light at
the end of the tunnel. I'm with you. I'd vote
for you if you were in our government. That sounds
like a great speech there, but I am still concerned
because we're you know, the regulations have gone today around
their affordability requirements, no more avocados. But what I already

(01:07):
see is there are lots of people already on affordable
debts that were able to access back credit anyway. So
I'm worried that the relaxation of the requirements may mean
that people can get in debt that they can't afford.
And that's because actually people believe what banks for finance
companies will tell them around their own level of affordability.
So if you go to some of the bad actors

(01:29):
in this financial financial system, they may say, yes, absolutely,
you can afford it, when actually that's they're not living
that life, and maybe people can't.

Speaker 1 (01:37):
So here's my thing about the triple C. If they
rules right, they were drawn up. They were drawn up
really to stop loan sharks, you know. But it also
stopped banks from issuing smaller loans, which was an unforeseen
thing from the whole appole tak okay ironically, because they
couldn't get the loans on the banks because the bank's
actually policed it harder. That drove people back to loan

(01:59):
sharks again. Actually, So surely scrapping the cc I is
still a bitter situation than keeping it, don't.

Speaker 2 (02:07):
You think Yeah, I think it's a balancing act. Like
you said, I think we shouldn't have compliance that adds
cost to consumers. And that's what happened, and there were
some unintended consequences. But I really think that we we've
seen in the past that people will go to the
place where they can get yes. You mentioned in your
in your chat before that people are still having tricky

(02:29):
situations and they need to find ways to pay. So
I'll go where we'll say yes. And historically and now,
there are some lenders that are more likely to say
yes that may not always have your best interest at heart,
because at the end of the day, lenders make money
out of people being in debt, don't.

Speaker 1 (02:42):
I yes, but most people, most people do have some
financial knowledge, most people don't make mistakes, most people aren't
as silly, right, but absolutely, But these rules, so this
rule is for a minority, and we need to find
a balance with these rules between making it easier to
exous loans for those people who are finentially but also
protecting vulnerable people from spiraling into too much debts. So

(03:04):
how do you do that?

Speaker 2 (03:06):
Yeah, well, I think there's a couple of things. I
think the commers Commission has a big role to play
around the bad actors. I mean, look, I've worked for
the service spoard office, I've worked for a big lender,
and now I'm a startup lender. I don't want massively
high cost of compliants because I don't want to pass
them on to the my customers, and I just want
to lend money out that I think i'll get back house.
I'll be bankrupt, and so would an entire sector. So
I think the balance is around those most vulnerable consumers

(03:29):
and having the support they need, so having this sort
of financial mentors and communities, having that education be there,
and having an avenue to complain if things have gone wrong,
because you're right, we don't need to protect an astume
everybodies then, you know, have a low level. You know,
we just need to have it sensible and pragmatic and
loving the fact that we'll be able to get more

(03:50):
people into their first homes, making sure that we can
have innovation happen so that we can have new entrance
to this financial services market, because the cost of compliant
stops with innovating as well. Business.

Speaker 1 (04:01):
I know a bloke who had to spend ten thousand
dollars on a leak in his roof. He didn't have
anyone to get a loan. Oh my goodness me. The
bank gave him the fourth degree. So it's good that
that goes because he had the wherewithal, he had the ability,
so this is a good thing. Hey, Sasha, thank you
so much for all the good work you do for people.
Sasha's the co founder and chief executive of social lender
Money sweet Spot. While we're talking about money quickly, the

(04:23):
Australian annual rate of inflation has risen to three point
eight percent, up from three point six percent at the
start of the year. Here in New Zealand, we're at
four percent in the twelve months to ourch twenty twenty four,
so actually things aren't that much better across the ditch
in terms of inflation. The RBA board over there will
now meet on Monday and Tuesday to discuss what to

(04:43):
do with the interest rates. Their cash rate target is
currently four point three five percent, and people are saying, well,
maybe they'll lift it to four point six percent. That
will be the fourteenth hike in this economic cycle. So
here's the rub. Then the pressure really goes on alban Easy,
who's starting to tank in the polls. He's starting to
get some bad economic information, and the speculation is that

(05:03):
he might start thinking about an early election. She's all
go across the ditch For more from Hither Duplessy Allen Drive.
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