Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Government takes bite out of loan sharks

The days of vulnerable consumers falling victim to loan sharks, truck shops and other predatory lenders are numbered, following the Credit Contracts Legislation Amendment Bill passing its third reading tonight.

“Too many Kiwis are being given loans that are unaffordable and unsuitable, trapping them in debt and leaving their families in hardship,” Commerce and Consumer Affairs Minister Kris Faafoi said.

“Previous changes made to consumer credit law didn’t go far enough to protect our most vulnerable consumers from loan sharks. We reviewed the law and found that, across the board, there is a continued problem of non-compliance – including by truck shops and high-cost lenders.

“We’re making changes to ensure that anyone borrowing money from high-cost lenders won’t be crippled by punishing debt.

“We’re introducing a total cost of credit cap, which means a borrower will not pay more than 100 per cent of their loan – including interest and fees.

“This legislation also introduces a rate cap so that no one will have to pay more than 0.8 per cent in interest and fees per day for a high-cost loan.

“And we’re also putting in place clear new requirements for all lenders to ensure borrowers can afford to repay their loan without falling into hardship.

“In many cases, people are getting loans they’ll never repay. One example I’ve heard about is someone taking out a $600 loan on $10 weekly instalments, and 18 months later owing $2,560 due to accumulated interest and default fees. This kind of debt-trap won’t be possible once the new rate cap and affordability requirements are in place,” Kris Faafoi said.

Other changes include:

• extending legal protections to credit provided by truck shops
• stiffer penalties for irresponsible lending
• enabling higher standards to ensure responsible advertising of high-cost loans.

All lenders offering consumer finance will also be required to undergo “fit and proper person” checks before they are allowed to operate.

Law changes will be phased in to allow lenders sufficient time to implement the changes.

The new legislation takes full effect on 1 April 2021.

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Double Standard That’s Bound To Dominate The Election

Are National really better political managers than Labour, particularly when it comes to running the economy? For many voters – and the business community in particular - their belief in National’s inherent competence is a simple act of faith. (For them, centre- left governments are just a temporary aberration by misguided voters, to be tolerated only until business-as-usual can be resumed.) Routinely for instance, the business confidence surveys continue to perpetuate the myth that National are the only prudent stewards of the economy. By and large, the business confidence surveys have been an outlet for the sustained temper tantrum felt by business leaders at the election result of 2017, rather than providing a rational assessment of the actual economic conditions. More>>

Published on Werewolf


Coronavirus: Health Staff To Meet China Flights

Public health staff will begin meeting flights from China from tomorrow to actively look for signs of the novel coronavirus and provide advice, information and reassurance to passengers. More>>


WINZ Quarterly Report: More People Getting Into Work

The December quarter benefit numbers released today show the Government’s plan to get people off the benefit and into work is starting to pay off,” Social Development Minister Carmel Sepuloni said. More>>


Changing lives: Boost In Whānau Ora Funding

Whānau throughout New Zealand are set to benefit from an extra three million dollars that will go directly to Whānau Ora Commissioning Agencies, the Minister for Whānau Ora Peeni Henare announced today. More>>


PGF Kaikōura $10.88M: Boost In Tourism & Business

The Provincial Growth Fund (PGF) is investing $10.88 million to boost business and tourism opportunities in Kaikōura, Parliamentary Undersecretary for Regional Economic Development, Fletcher Tabuteau announced today. More>>


Whitebaiting: Govt Plans To Protect Announced

With several native whitebait species in decline the Minister of Conservation Eugenie Sage has today released proposals to standardise and improve management of whitebait across New Zealand. More>>


Education: Resource For Schools On Climate Change

New resource for schools to increase awareness and understanding of climate change... More>>


In Effect April: New Regulations For Local Medicinal Cannabis

Minister of Health Dr David Clark says new regulations will allow local cultivation and manufacture of medicinal cannabis products that will potentially help ease the pain of thousands of people. More>>






InfoPages News Channels