Law change needed over loan sharks – Goff

Otago Daily Times 21 Jun 2011

A summit to tackle unscrupulous loan sharks has been slammed as a “talk-fest”, with Labour leader Phil Goff saying a law change is needed to stop credit companies preying on vulnerable consumers. Consumer Affairs Minister Simon Power today announced a summit in August would look at tackling gaps in the system that allowed companies to take advantage of people in tough economic times. Mr Power said there could be changes to the Credit Contracts and Consumer Finance Act, which covers the disclosure of credit information to consumers, but added that voluntary industry initiatives could also be an option. The minister said it was too easy for unwary consumers to agree to something they did not fully understand and become trapped beyond their means. “We need to do something about that — and we will. The preying on of vulnerable people by loan sharks has to stop,” Mr Power said. The announcement comes a day after questions were raised over loan company Ferratum New Zealand offering loans of up to $600 via mobile phone, at interest rates of almost 300 percent per annum. Mr Goff said the summit would not go far enough to tackle loan sharks and a law change was needed. “We don’t want summits, we don’t want talk-fests — we want a piece of legislation that sets a maximum rate so that loan sharks have to lend below that level and legislation that says that they can’t lend knowing that people can’t afford to repay,” he said. “We need legislation on this now … no more talking — let’s get some action.”

When Labour MP Carol Beaumont last year introduced a private member’s bill to tackle the issue — the Credit Reforms (Responsible Lending) Bill — the Government voted against it. National MP Sam Lotu-Iiga last month introduced his own member’s bill — the Moneylenders (Licensing and Regulation) Bill — which would register and licence lenders.