April 30, 2020
Loan shark block brought forward
Measures to protect people from loan sharks have been fast-tracked.
The changes under the Credit Contracts Legislation Amendment Act were due to start on June 1, but they’ve been added to the COVID-19 Response (Taxation and other Regulatory Urgent Measures) Bill going through Parliament today.
Consumer Affairs Minister Kris Faafoi says COVID-19 is putting a lot of whānau under financial pressure, and some may turn to high-cost, short-term loans.
The Government wants to do as much as possible to ensure vulnerable borrowers don’t get trapped in spirals of debt.
The improved protections mean people borrowing from high-cost lenders will never have to pay back more than 100 per cent of the loan principal, compound interest on high-cost loans will be banned, and fees for defaulting payments will be limited to $30 (unless the lender can show that the higher amount reflects their costs).
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