Bill targeting loan sharks clears first hurdle
Legislation targeting unscrupulous money lenders has had its first reading in Parliament and although it has been generally welcomed across the political spectrum, some question the time it has taken to reach this stage.
The Credit Contracts and Financial Services Law Reform Bill had its first reading on September 17.
The bill has been referred to the Commerce Committee.
The bill rewrites the rules for consumer lending with the aim of offering greater protection to those who are more vulnerable to loan sharks.
Minister of Commerce Craig Foss says vulnerable consumers often have limited financial literacy and lack knowledge of their rights.
"This bill is about protecting vulnerable consumers," Mr Foss says.
"We know that, unfortunately, all sorts of people can be vulnerable because they lack financial literacy.
"We also know that people who are facing tough financial times and need credit for essential items have fewer options and are more vulnerable than other consumers."
Onehunga-based Labour list MP Carol Beaumont has been campaigning for tougher loan shark laws and supports the new legislation.
But she says it has taken far too long to bring it to this stage.
"We are very critical of the delays in getting to this point and the lack of priority given to regulating unscrupulous, predatory lenders who charge excessive interest rates and who lend irresponsibly," she says.
"It has been clear for over five years that the Credit Contracts and Consumer Finance Act needed reviewing and strengthening."
She says there are many positive provisions including responsible lending requirements, extending the cooling-off period, greater requirement to be explicit about fees, a range of improvements for repossession including licensing of repossession agents, and being able to use hardship provisions once in default.
She would like to see measures that address excessive interest rates included.
"We are encouraging people to submit on this bill," she says.
Onehunga Citizens Advice Bureau manager Alathea Roberts says there is a definite need for reform to protect the more vulnerable.
"Anecdotally there are matters that come through where there are clients who have got involved in borrowing with interest rates and terms they haven't necessarily been aware of," Ms Roberts says.
"They needed money then and there and years later they are still paying it off.
"There are definitely situations where there are terms that are unconscionable for the client."
She says lack of financial literacy or confidence is often seen by CAB volunteers.
- © Fairfax NZ News
Do you wear a lifejacket when you are on the water - no matter what vessel you are in?