Move to protect borrowers from greedy loan sharks

The Press 21/04/2010

A bus driver was called every 10 minutes by a loan company, 20-year-olds have $100,000 debts and a man owed $33,000 on a $6000 car. These are just three of the loan-shark horror stories that Christchurch social campaigners have unearthed. They have been passed to Auckland-based Labour list MP Carol Beaumont, who has sponsored a bill that aims to put a cap on interest rates for loans. Beaumont said in Christchurch that loan sharks were preying on the poor and trapping them in debt. “It is a huge problem in the Pacific Island community, and the consequences are very real for people and their families as they get into very difficult arrangements where they are paying excessive interest,” she said. “No-one says it is not a problem. It is time to do something about this problem.” Beaumont said the amount a borrower pays in interest should not exceed the value of the item bought with the loan.

..The bill has the support of Labour and the Green Party. Beaumont is campaigning to get Government support. The bill will get its first reading in Parliament at the end of next month. Beaumont said she hoped the bill would get through to a parliamentary select committee so it could be debated and new ideas could emerge. Ad Feedback Consumer Affairs Minister Heather Roy said she had reservations about price control on credit.