The Government's announced new measures to combat loan shark lenders who charge high interest on relatively small loans.
There will be a cap on the total amount of interest and fees that can be charged by loan sharks. Loan sharks will not be able to charge interest and fees larger than the loan itself.
The legal status of notices telling salespeople not to knock on a residential door will be strengthened. Consumer NZ ran a campaign giving out free 'do not knock' stickers in 2014, aimed at deterring door to door sellers selling "grossly overpriced products".
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Loan sharks who break the rules will face 'stiff penalties' and a 'fit and proper person' test will be introduced for lenders, door-to-door salespeople and truck shops.
"The introduction of an interest and fees cap on high-cost loans will prevent people from accumulating large debt from a single small loan," Consumer Affairs Minister Kris Faafoi said.
"For example, if you borrow $500 you will never have to pay back more than $1000 in total, including all fees and interest."
Lenders could be fined up to $600,000 for breaching responsible lender principles.
"These new measures will halt the very worst of those preying on vulnerable and desperate people while enabling borrowing that meets their needs in an affordable way.
"They will protect families through capping the total interest and fees charged loans, introducing tougher penalties for irresponsible lending, and raising the bar for consumer lenders to register as a Financial Service Provider," Prime Minister Jacinda Ardern said.
The new measures will come into effect from 2020.
Newshub.
