Just over two months ago I launched my campaign to stop loan sharks. In one weeks’ time, Wednesday 26 May, the First Reading of the Bill that is part of this campaign – The Credit Reforms (Responsible Lending) – will take place. Currently I believe I have support from five parties. Unfortunately this will not be sufficient. I need your help to urge National to vote for the Bill to go to Select Committee.
Here’s why I think you should support the Bill and work to get National to support it.
The Bill is a genuine effort to deal with aspects of a truly harmful industry, an industry that causes damage to many low income families who struggle to make ends meet. Extremely high interest rates, some in three or four figure percentages, and irresponsible lending put families at risk. At risk of a never ending cycle of high interest borrowing and much needed money going to lenders rather than on things that families actually need. The tales of human tragedy I have heard over the last two months are truly terrible. We need to do something.
I have spoken to hundreds of people including many from the agencies that deal with the people who are in terrible financial trouble because of loan sharks. Every Budgeting Service I have met with tells me the majority of people they see are hooked into high interest rate loans. One in Mangere told me that everyone they see is in this position. No-one denies the problem and everyone I have spoken to wants something done.
There is an opportunity here for Parliament to show leadership, for all parties to support this Bill to a Select Committee so it can be properly scrutinised, so that the public can make submissions and share their experiences and so that we can look at what is being done in other countries. Interest rate caps for example are widespread internationally but you would not know this if you listened to the Minister of Consumer Affairs or indeed some National MPs who assert that interest rate caps won’t work. Some are saying the Government is already working in the area of consumer credit. There is some truth in that statement as there is a Review of the Credit Contracts and Consumer Finance Act which is proceeding at a glacial pace (sadly) There were some very good suggestions made in the Discussion Paper and in the 59 responses to it. Suggestions in the area of disclosure of loan terms and security for loans are a couple of examples. I have said to the responsible Minister, Heather Roy, that the review is weakest in the area of ‘fringe lending’ and that my Bill alongside any proposals the Government may (finally) make could be considered together at a Select Committee. Many people have made specific suggestions to me that would really add to the possible range of ways we can address this problem.
And then of course there is at least one National MP who is saying my Bill doesn’t go far enough without concrete suggestions for anything else. I have been explicit that the Bill is not the whole answer. How can it be when there are a range of issues that surround the loan shark industry eg inadequate income levels, difficulties for some in accessing credit on a fair basis, poor enforcement of current protections and of course shocking financial literacy and understanding of consumer rights. There are a range of additional things that could and should be done. I would welcome any suggestions for strengthening my Bill or dealing with related issues.
None of these excuses that I am hearing that some National MPs are trotting out are reasons to vote against my Bill. In the community people are asking me questions like – how could National vote against sending this to a Select Committee? Will they do so just because you are a Labour MP? Well let’s see next week but please try to encourage National to do the right thing, I am certainly continuing to do so.
The more I have heard in the last two months the more passionately I feel that we must regulate this industry as well as continuing to seek solutions to the wider set of issues surrounding it. I committed at the launch of the campaign that irrespective of the outcome of the vote on the Credit Reforms (Responsible Lending) this campaign will continue. The support for the campaign is wide ranging from Churches, Community Law Centres, Budgeting Services, Pacifica and Maori organisations, Unions, Citizens Advice Bureaus, student groups, Women’s organisations, Local government politicians, lawyers and decent concerned citizens including some National Party voters and people who have personally been hurt by this industry. My resolve on this matter has only strengthened over the last two months. If you want to help you can act now and join in with the ongoing campaign. If you want more information go to www.stoploansharks.co.nz