Loan sharks rob' desperate Kiwis

The head of the country's biggest credit union has taken a swipe at loan sharks, who he says are carrying out "legitimised robbery" of unsuspecting clients.

Gavin Earle, chief executive of NZCU Baywide, said loan sharks were causing despair among the vulnerable, desperate and unwary in the community.

Mr Earle, who is based in Hastings, said one lender was openly advertising a daily interest rate of 1.3 per cent per day.

"That doesn't sound like much, but this equates to an actual rate of 475 per cent per annum," he said.

"Even worse, should you default on your repayments, you're hit with an additional penalty rate of 75 per cent per annum."

Mr Earle said those rates were "fantastic" if you were the lender, but crippling if the borrower.

New Zealand, largely, was a country of people who valued fairness.

"We won't cheat and we don't like those who do, and we bring up our children to believe that life is about playing hard, playing to win, but always playing fair.

"The thought of being ripped off or taken advantage of does not sit well with those who spend long hours on the job in order to provide a standard of living that our loved ones deserve," he said.

"But unfortunately, there are those in our communities who think that making a quick buck by fleecing the vulnerable, desperate and unaware is okay."

Mr Earle said loan sharks were charging exorbitant interest rates and fees to those who did not understand the ramifications of the financial transactions they had entered into.

"Personally, I find this type of legitimised 'robbery' abhorrent."

Combine a lack of financial literacy with an unscrupulous loan shark and we end up with families getting into serious financial strife, with consequences way beyond their control, he said.

"How is that fair? It's not, but it's actually legal."

He said he welcomed the Government's move to do something about loan sharks which aimed to improve consumer protection against unprincipled lenders.

Mr Earle said his staff were often called on to help a family that had got itself into financial strife because of loan shark activity. That usually involved trying to consolidate high-interest debts into manageable levels while providing the guidance and education to prevent similar circumstances happening again.

"Unfortunately, my team and I only see the tip of the iceberg. What we need now is a legislative solution to this issue."

Mr Earle said he was going to take the matter up with politicians to get cross-party support for such an initiative.