Topic: BUDGET

Swift capping on loan sharks needed

By Mānia Clarke
  • Auckland

A budgeting support worker says increasing penalties for irresponsible lending by loan companies should put a stop to loan sharks targeting vulnerable families.

It's a suggestion that has been made in a government discussion paper, as outlined in a review of the Credit Contracts and Consumer Finance Act.

Mangere Budgeting and Family Support Service CEO Darryl Evans says the capping interest rates and fees of money lenders could not happen soon enough.

“Many money lenders especially the third, fourth-tier lenders- the piranhas that target the poor, they're already underground, they're already operating from mobile shops, they're already door-knocking low-income communities, they're in the back of two dollar shops,” he says.

Evans says the contracts are in legal jargon and font sizes are small and difficult to read.  He says families are set up to fail from the moment they sign on the dotted line.

“Why are our contracts not in Māori, Samoan, Tongan, and a range of other languages so that our people truly understand what they're signing?” 

Possible measures under consideration in the discussion review include caps on interest rates and fees, and also strengthening enforcement and penalties for irresponsible lending.

Minister of Commerce and Consumer Affairs, Kris Faafoi says “The review at this stage has uncovered some practices that we're not happy with, whether it be high-interest rates, debt collection practices or some of the practices by mobile truck shops and mobile traders.”

Evans says the majority of people who go to loan sharks are often in desperate need.

“What they actually need money for is to put kai on the table,” he says.

“They need money to keep the rental because they've often got into arrears and they're two or three weeks away from becoming homeless.”

The government is seeking public feedback on their borrowing experience through the MBIE website until the 1st of August.