Call for govt action against loan sharks

Charles Chauvel

An opposition spokesman has had enough of financially-strapped people being gouged by loan sharks.

"Payday loans" that equate to 2000 per cent interest a year are a disgrace and New Zealand is about the only country left in the world that does not have laws in place to deal with them, Labour Associate Justice and Commerce spokesman Charles Chauvel said today.

Chauvel has prepared a private member's bill to regulate the "payday lending" sector that typically charges interest at "only" 9 per cent per week or on a compounding basis - around 2000 per cent p.a.

"One of the things the Bill would do is to allow for maximum interest rates to be set - a power that does not exist in New Zealand law at the moment. Most other jurisdictions, including the Australian states and territories, have such a provision.

"The proposal has in principle support from Labour, the Progressives, Greens, and the Maori Party.

"But I would rather see the Government legislate to deal with loan sharks. The Government needs to act.

"A private member's bill has to go into a ballot to be drawn out along with other members' bills. There has not been a ballot in many months because there has not been room on Parliament's order paper for new private bills.

"Even if there is a ballot soon, there is of course no guarantee that my Bill will be drawn.

"Meanwhile, vulnerable borrowers continue to suffer as "payday lending" borrowing to survive from one pay-cheque to the next at huge interest rates becomes more of a problem as economic conditions worsen," Chauvel said.

"It's all very well to guarantee bank deposits and slowly roll out a 9 day fortnight. But this is something that would help those in real financial trouble. I call on the Government to do the right thing and take action in this area now," Chauvel said.