Predatory lenders in the crosshairs
Mobile truck shops and payday lenders are now in the crosshairs as the Government’s consumer law reforms take effect.
Consumer Affairs Minister Kris Faafoi and Prime Minister Jacinda Ardern visited a Porirua kindergarten yesterday to publicise the Government’s efforts to curb predatory money lenders.
Changes to the Credit Contracts and Consumer Finance Act came into effect this week.
Mobile traders and truck shops will now have to meet already established ‘‘responsible lending protections’’, there will be a cap on interest rates for loans, and there will be a limit on how often lenders can provide credit to people already in debt.
‘‘Predatory lending causes severe financial hardship in communities across New Zealand. The economic impacts of Covid-19 have only exacerbated the need to take a harder line,’’ Faafoi said.
Some lenders who offered people high-cost loans were charging more than 600 per cent interest a year, Faafoi said. An interest cap would now limit this to 0.8 per cent per day, he said.
‘‘Earlier this year, we fast-tracked protections against the financial impacts of high-cost loans, including limiting total cost of credit to 100 per cent of the principal – so your debt cannot grow indefinitely – and banning compound interest.
‘‘The measures that took effect this week build on those changes to further protect vulnerable borrowers and wha¯nau from predatory lenders.’’
The kindergarten, Wha¯nau Manaaki Kindergartens, holds a social work contract and offers a budgeting service to families.