Loan Sharks Still Circle Despite New Lending Code

New Zealand families still face extremely high interest rates when they borrow from loan sharks despite new regulations, says New Zealand First.

“The government’s new Responsible Lending Code does not stop loan sharks demanding huge repayments,” says New Zealand Social Development Spokesperson Darroch Ball.

“What was needed was a maximum cap on the rate that could be charged to protect people who cannot borrow anywhere else.

These restrictions came into force in Australia on July 1, 2013 and in Britain in January this year. Both countries tried to avoid interest rate caps but found no alternative.

“Britain was one of the last in the EU to implement them. The US is implementing a cap across the whole country with 85% of states already protecting people in this way.

“The opportunity to protect New Zealand’s poorest families was lost last year by one vote when United Future leader Peter Dunne did a turnaround and refused support after initially backing a member’s bill in 2010 which contained the same interest cap provision.

“New Zealand First will be closely monitoring the impacts of the Responsible Lending Code this year,” says Mr Ball.

“The government must wake up to the fact that New Zealand is one of the last remaining countries not to have an interest rate cap and it is this key component that was always missing from the amendments to the Credit Contracts and Consumer Finance Act 2003.”

ENDS

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