News

National slaps loan sharks with a dead fish

New Zealand is one of the few countries in the OECD who has continued to deny the most vulnerable citizens the protection of a capped interest rate. The Guidelines slap loan sharks with a dead fish, and sidestep the very real need for the Government to cap interest rates.

Read the full Media Release below:

Media Release 29 April 2011

 

National slaps loan sharks with a dead fish

 

The Government is claiming the Responsible Lending Guidelines will ensure responsible lenders and provide protection for borrowers.

Child Poverty Action Group welcomes information about the dispute resolution services that are available to consumers at no cost, but we object to the pretence that the Guidelines will address the issues of finance companies making loans with cripplingly high interest rates, punitive default conditions, and excessive security and powers of repossession.

The use of the words: “fair” and “reasonable” in the Guidelines do not mean those standards are met by lenders.

A loan shark thinks it is fair and reasonable to double the interest if repayment is late, and to itemise as security everything that is removable in the borrower’s home, including the children’s beds and bedding.

A loan shark thinks it is fair and reasonable to lend more than a family can afford to repay, and then lend more at a higher interest rate so the family can make the repayments on the first loan.

A loan shark thinks it is fair and reasonable to charge 10% interest per week. And this Government agrees that 500% interest per year is not a crime.

New Zealand is one of the few countries in the OECD who has continued to deny the most vulnerable citizens the protection of a capped interest rate. The Guidelines slap loan sharks with a dead fish, and sidestep the very real need for the Government to cap interest rates.

 

See the Financial Services Federation Guidelines at: www.fsf.org.nz.

See the Community Coalition to Stop Loan Sharks.