Government targets loan sharks

Preying on vulnerable people by loan sharks has to stop, and the National Government is doing something about it. The Government plans to overhaul consumer credit laws to protect unwary consumers from being preyed on by unscrupulous credit companies.

There has been significant and much-needed reform of the investment side of the financial sector over the past three years. However, credit providers remain largely unregulated and have no conduct requirements, leading some to exploit vulnerable people, resulting in severe financial hardship and spiralling debt.

Cabinet has approved a package of changes that was shaped by the Government’s Financial Summit, held in August, which brought together 250 people from community groups, budgeting services, NGOs, banks, financial regulators, and credit companies to look at ways of tackling irresponsible lending.

These changes represent a multi-pronged approach towards promoting responsible lending by increasing consumer protections, requiring lenders to give borrowers more information, and beefing up the powers of enforcement agencies.

Because this is a complex area, the Government intends to release draft legislation for consultation on the proposed changes in advance of introducing final legislation to Parliament.

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