Chester Borrows: Shark net needed to protect vulnerable

It's too easy for the unwary to agree to something they don't understand and become trapped beyond their means. LAST week, Commerce and Consumer Affairs Minister Simon Power announced a financial summit would be held to look at ways to tackle unscrupulous credit companies that prey on unwary consumers. This will be held in August and will be a welcome chance to strategise ways to stop this problem.
There are gaps in the system that allow compassionless and dodgy money lenders to take advantage of vulnerable people when it comes to access to consumer finance in these tough economic times. And when that happens it's too easy for the unwary to agree to something they don't understand and become trapped beyond their means.
There are many credit companies that are transparent and responsible. But there are others that aren't. We aren't aiming at specific companies or schemes either, but want to focus on where people have access to funds where disclosure is not immediate and accessible.
While I'll be the first to admit that there needs to be a degree of personal responsibility in the way people manage their finances, some are simply less able to do so well and will get taken for a ride by any smooth-talking loan shark.
It's important that we spark a conversation across the Whanganui electorate and the country that wakes people up to this. The summit plans to culminate in an action plan that has initiatives to help vulnerable people trapped in a debt spiral caused by lack of financial literacy, consumer choice and high, compounding interest rates.
We need to send a clear message to all financial sector providers - from the bigger and more mainstream ones to the small, third-tier ones - that they all need to practise and commit to responsible lending and responsible consumer debt management. The summit will also provide the forum to decide on a clear direction about how the Government can best contribute to improving the financial literacy of New Zealanders.
The question will be whether the Credit Contracts and Consumer Finance Act needs to be amended to provide more protection for consumers - including from irresponsible lending - or whether the same outcomes can be obtained from voluntary industry initiatives.
Here's to fending off those loan sharks.