Family First NZ is welcoming a government-backed Ministry of Consumer Affairs investigation into loan sharks.
“Vulnerable families are falling victim to exorbitant interest rates and draconian penalty clauses,” says Bob McCoskrie, National Director of Family First NZ.
“Many of these families have poor English and simply don’t understand the contract they are signing or the potential consequences if they default.”
“Many families are under incredible pressure because of the rising consumer price index including basics like milk, fruit and vegetables, interest rates and rents, and increasing petrol prices, and the loan companies are simply exacerbating the problem.”
“These loan sharks are simply feeding off vulnerable people.”
Many of the issues around domestic and family violence are related to the stress of payments to these loan sharks, especially by low-income families. The loan sharks also specifically target low socio-economic areas where the desperation for fast cash is prevalent.
“This investigation has been a long time coming, but is a perfect opportunity to look at issues of the availability and accessability of budgeting advice, poverty issues among low- to middle-income families, stresses of family life, and the easy availability of credit.”
Family First would like a maximum interest rate to be able to be charged on these contracts, a standard default clause with no surprises, and the availability of legal advice for vulnerable families.
“At the end of the day, you can’t change people’s spending habits or unwise money choices, but we should place as many safeguards in place as possible to prevent exploitation of these people.”