The National Government’s announcement that it will host a Financial Summit on Loan Sharks in August 2011 is an election stunt, to make believe that it intends to do something about the damage sharks cause.
This is the same Government that failed to take action on changes proposed to the ‘Credit Contracts and Consumer Finance Act’ after extensive consultation.
This Government voted down my ‘Credit Reforms (Responsible Lending) Bill’ (last year) that dealt with critical issues like excessive interest rates and irresponsible lending.
Consumer Affairs Minister Simon Power’s proposed summit simply reveals that the Government does not take the issue seriously, and is not willing to provide the leadership that communities desperately need.
All he is doing effectively is kicking the issue for touch, knowing well that the timing of his summit will rule out any legislative changes this year.
When National voted down my Members Bill at its first reading, it ignored pleas from organisations with which they now want to engage. National played party politics instead of addressing community needs.
If the Government had supported my Bill to Select Committee, MPs from across the spectrum could have heard firsthand the concerns that would be raised at the forthcoming Summit.
That process would have allowed a bipartisan approach to legislation.
Labour acknowledges the need to engage with those at the coalface.
That is why we re-launched the ‘Stop Loan Shark’ campaign as a community alliance supported by groups such as the Salvation Army, the New Zealand Federation of Family Budgeting Services, Child Poverty Action, FINSEC (the Finance Sector Union) and many others.
Struggling families have increasingly been forced to take out high interest loans and in many cases have been caught in a cycle of debt to meet the ever-rising cost of living,
Labour will work constructively with the Minister on any changes emerging from the summit, but it is a shame that National was not prepared to do likewise when it had the opportunity 12 months ago.
Loans over text
National’s inaction on loan sharks has been exposed by a new text message loan service, which charges interest rates of up to 292% per annum to vulnerable consumers.
The Government must take action to combat irresponsible lending.
This initiative, announced last week (June 21) illustrates the inadequacy of the current lending legislation.
Finance company Ferratum New Zealand is now offering loans of up to $600 via cell phone in a Scheme, which, according to Country Manager Richard Yoon, ‘makes available funds in a couple of minutes.’
He said the Scheme is “hugely beneficial, since it allows consumers to complete purchases, which may have otherwise been declined.”
This new high interest lending is another example of people preying on New Zealanders struggling to make ends meet.
I am particularly concerned that the use of texting is a way to target young people and those on low incomes.
Ferratum suggests its service allows lenders to meet urgent needs such as grocery bills. This reveals today’s stark reality.
Families are lending to feed their families.
They cannot combat the rising cost of living alone.
Meanwhile, the review of the Credit Contracts and Consumer Finance Act languishes and Ministers praise voluntary schemes as the solution to the problem of loan sharking.
We do not need more evidence of the harm loan sharks inflict on our communities. National’s lax approach adds fuel to the fire and it will be families who are burnt.
Labour is promoting two new Private Members Bills and will campaign hand in hand with the community to continue calling on the Government to stamp out irresponsible lending.