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
These people are a scourge on society, preying on the uneducated and desperate.- There is a big difference between filling a financial need and blatant exploitation.
Hell yes!
Your bill seeks to stop people’s stupidity. What next will you try to control of these people’s lives? What they eat, drink? Who they marry? How many children they have? Who their friends are?
Maybe people should take responsibility for their own actions, and not expect the govt to bail them out. Maybe, at that point, they will make better quality decisions.
Why don’t all those organisations that support the Bill simply tell their members and followers not to go near loan sharks? Why does it need legislation?
…and of course shocking financial literacy
Well there’s your problem right there!
Put some serious resources into this, and yet more legislation (which in all probability will be as poorly resourced as the current set) becomes a moot point.
What are peoples thoughts on Stacey Jones being the face of Instant Finance???
Thy prey on the vulnerable. Unless you have been desperate, you don’t know how tempting it is. No I never have used a loan shark, but have been so desperate that the thought did cross my mind for a split second
@ a mother – if one is so desperate and there is no possibility of cash from other means – where can someone go if they cannot use a “loan shark”?
Yes they are bottom feeders – but they are working with people at the bottom. What next – legislate that finance companies must give them loans – knowing that they cannot be paid back.
Chris, sarcasm does not become you.
You make it sound as if loan sharks help the desperate. Yes, for about a day.
Then they make the situation for that person far worse, day by day by day.
That, which you surely understand now, is the actual problem.
Loan sharks need leglislating because I think a sucker is born every minute.
@loota – you still dont answer the question – when they have no money and need some yet are unable to borrow from other places because of bad debt the loan shark is the last person they can go to. Where do you expect them to go?
The problem is that the person gets themselves into such a position of having to use them is their own fault – paying debts and being able to gain access to funds from ‘normal’ lending institutions isnt a “right” – its something that needs to be earned – generally by having the $ to pay it back and building a good history of repaying debt.
Chris said:
Chris, going to a loan shark makes their financial situation much worse not much better. I mean, you could cure an alcoholic’s hangover with a couple of shots of whisky but are you doing them a real favour?
To answer your question, I suggest a budget advisory service as the first stop, and sooner the better.
The budget advisory service is open to them already – banning loan sharks isnt going to change that – so that really dosnt solve the issue – does it?
Chris, giving crack to a crack addict doesn’t solve the issue – does it?
“I mean, you could cure an alcoholic’s hangover with a couple of shots of whisky but are you doing them a real favour?”
Would tide them over until they could get to Maccas.
I think loan sharks should have a limit on the interest they can charge. I’m on the fence over banning them.
Wake up everyone – we live in a free world – if the business was so good and so profitable – some big guys like Cash Converters would come in with a low rate and knock many of the little guys over – I suspect the losses are significant – hense the rate is high with all players in the industry.
Force education – but dont take away the free market!!
Limit the interest and the thousands who use the services responsibily won’t have anywhere to go. (except underground)
Very dangerous path – just beacuse another Country took that path does not make it the right one.
Next we will be regulating how many Big Mac’s we are allowed to eat…..lots of good stories for you about the fatties from the Big Mac – Waring 6 Big Mac’s a day may make you fat!!
Interest rates = the risk associated with the loan – Wake up.
I don’t see you or any of your friends setting up shop offering loans at low rates – or anyone else for that matter….Why…I suspect because you know you will go broke.
You are on a path that will remove people’s options and freedom to make decisions for themselves….be careful about the direction you are going…..nice political point scoring if you can pull it off….