October 10, 2018
Loan sharks given notice of crackdown
The Government intends to crack down on loan sharks by applying a 100 percent cap on the total amount of interest and fees charged and stiff penalties for lenders who break the rules.
Legislation to be introduced by 2020 will also include a fit and proper person test for lenders, door to door salespeople and truck shop operators.
Announcing the move at a Māngere budgeting centre this morning, Prime Minister Jacinda Ardern said the Government wants to stop families getting trapped in debt spirals and poverty that result from unfair lending and payback terms.
She says the first port of call for families in needs to be Work and Income, but there will be times people will need extra funds for emergencies.
"We need to make sure though that in desperate circumstances where families are going to those predatory lenders, that they are not finding themselves in a debt spiral because they are paying three times the loan in interest rates and fees. We have got to put a cap on that," Ms Ardern says.
Consumer Affairs Minister Chris Faafoi says the majority of people using predatory lenders are Māori and Pasifika, but anyone can be targeted.
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