MP fears for bill to beat loan sharks

Carol Beaumont. Photo / NZ Herald
Carol Beaumont. Photo / NZ Herald

A members bill to stop loan sharks is up for its first reading tonight but the Labour MP behind it is fearful it will be voted down.

Carol Beaumont's Consumer Credit (Responsible Lending) Bill was introduced to Parliament last August.

It would allow maximum interest rates to be set and would require a lender to reasonably believe a borrower would be able to repay a loan.

It also seeks to limit the ability of lenders to recover more than they initially lent in the event of a default.

Ms Beaumont said her bill was aimed at preventing loan sharks from charging excessive interest rates and lending irresponsibly.

"Many loan sharks lend out money at obscene rates, without checking to see whether the borrower will be able to meet the repayment requirements."

The lenders targeted Maori and Pacific Island communities and students, she said.

The bill was not a complete fix but was a start and Ms Beaumont wanted other MPs to support it through to a select committee hearing.

"I believe to do nothing would be irresponsible and a failure in the eyes of our communities."

Ms Beaumont said she was fearful the bill would be voted down today and that would be a terrible mistake.

Parliament needed to show leadership in tackling loan sharks.

At a photo opportunity outside Parliament yesterday Ms Beaumont and a small group threw a net over a shark - a symbolic action to show what they wanted to do to loan sharks.

Andrew Casidy, general manager of the financial-sector union Finsec, said the Government should support the bill to select committee and side with vulnerable consumers instead of dodgy loan sharks.

"If the Government votes this bill down it is denying a public vote to communities who have been devastated by shonky loan-shark practices."

Many European, African and South American countries and Japan already had interest rate restrictions and caps were being implemented or imposed in Australia, Canada, the United States and the United Kingdom, Mr Casidy said.

"National MPs need to stand up for vulnerable low-income borrowers for once."

- NZPA

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