In the same week as Steve Brooks placed an unorthodox election ad for National his fringe lending business has called for looser restrictions on its activities.

The businessman behind a bizarre unauthorised ad for the National Party runs a payday lending operation that has opposed government efforts to limit the amount vulnerable borrowers must pay.

Steve Brooks is a director and co-owner of NZ FinTech which runs fringe lenders Moola and NeedCashToday, and the car finance firm Zooma. Moola charges annualised interest rates of up to 620% plus fees.

Brooks, who runs a string of enterprises and claims to have made his first $1 million by the age of 19, placed the half-page advertisement in the Weekend Herald on Saturday. It depicts departing Air New Zealand chief executive Christopher Luxon morphing into former prime minister John Key, with the hashtag #National 2020. The image is a play on Dick Frizzell’s 1997 piece Mickey to Tiki Tu Meke. 

The National Party says it has nothing to do with it, and the Electoral Commission is currently looking into whether the ad breaks election advertising rules.

Meanwhile submissions closed last week on a set of changes that will have a huge impact on Brooks’ business if they become law. The Credit Contracts Legislation Amendment Bill is designed to clamp down on predatory lending practices and stop borrowers being caught in a spiral of unaffordable debt. It caps the amount financiers such as Moola and NeedCashNow can charge by limiting total interest and fees to no more than 100% of the original amount borrowed.

NZ FinTech is arguing against the proposed 100% cap. In its submission on the bill it says the cap should be 200%, and exclude the numerous fees lenders in its sector charge.

Brooks’ payday lending operation is also against a cap on interest rates which many budgeting and community groups have called for, although the bill currently doesn’t include this.

Capping fees and interest rates “is likely to affect the profitability and viability of short-term lending, which will result in fewer legitimate options for borrowers to access short-term finance”, NZ FinTech says.

While loans from the likes of Moola are designed to be short term, if the borrower defaults and stretches their repayments out they end up paying exorbitantly high interest rates. In Moola’s case a short term borrower would pay 620% in interest over the course of a year plus a raft of fees and penalties. Moola’s charges include a $21 establishment fee, a $20 default fee, a $11 extension fee, $30 to have a payment deducted from your wages, $5.42 to pay by credit card, and $20 to cancel a direct debit.

If the government does go ahead with its intended 100% cap it should still exclude fees, NZ FinTech argues.

The payday lender is also against a change that would stop it taking the debtor’s word for it on their situation. Although financiers are supposed to be responsible lenders, at the moment they can rely on what the customer tells them. Under the planned new law they will have to make “reasonable inquiries” themselves to check out the borrower’s ability to repay.

NZ FinTech says having to gather this information could mean higher costs for customers. “In considering affordability assessments, it is important to strike a balance between making an accurate assessment and making the application process overly onerous,” it says. “Making the process overly burdensome on consumers is likely to drive consumers to less scrupulous lenders.”

Commerce and Consumer Affairs Kris Faafoi’s official diary shows he met with Steve Brooks last year. Faafoi is championing the Credit Contract Legislation Amendment Bill. The meeting was in Moola’s office at 299 Durham Street North in Christchurch, which is also the registered address on Brooks’ rogue National Party ad.

Unsurprisingly NZ FinTech is not the only lender opposed to the planned crackdown on credit contracts. Cash Converters is vehemently against having to make reasonable inquiries about a borrower’s financial situation. “It will drive up lending costs, create more financial exclusion, impose additional intrusive obligations on borrowers and will not deliver benefits for the consumer,” it argues in its submission on the bill.

It is also opposed to the concept of an interest rate cap, which it claims has been promoted by budgeting groups “who, due to the focus of their work, are only exposed to a very narrow subset of small loan borrowers”.

Save My Bacon is another payday lender not happy about the idea of having to check out its borrowers’ information, and it wants the total cost cap widened to include additional advances, not just the original loan amount.

Church, community and budgeting agencies are almost universally in support of an interest rate cap, and many call for other restrictions such as a ban on shopping trucks, equal protection for loan guarantors as for borrowers, and a ban on the use of direct debit authorities by high cost lenders.

The Catholic Archdiocese of Wellington points out that most borrowers use payday loans to cover ordinary living costs such as power bills, not one-off or unexpected expenses as many financiers claim.

It quotes Pope Francis in its submission on the bill. “Usury [excessive interest] is an ancient and unfortunately still concealed evil that, like a snake, strangles its victims. It tramples on the dignity of people, is a vehicle for corruption and hampers the common good. It also weakens the social and economic foundations of a country,” the pope said in February 2018.

Brooks and NZ FinTech chief executive Guy Randall have not responded to The Spinoff’s requests for comment.