Nation: trying to clamp down on loan sharks

An overdue attempt to clamp down on loan sharks is covered in Newshub nation this morning.

Consumer Affairs Minister Kris Faafoi live in studio: Says there were 103,000 potentially dangerous Takata airbags in circulation, says around 53,000 are still outstanding.

They talked to him about loan sharks after that.

Ironically I just checked the spam bin and the only one there is for online loans.

Nothing much on what he said though – and i was multitasking and not really listening so can’t help there.

A lot more on it elsewhere:

From Kris Faafoi:


Credit review and measures to stop predatory lending released for discussion.

Minister of Commerce and Consumer Affairs Hon Kris Faafoi today released the discussion paper outlining findings from the review of the Credit Contracts and Consumer Finance Act.

Possible measures identified in the paper to protect consumers include caps on interest rates and fees, increased licensing or registration for lenders, strengthening enforcement and penalties for irresponsible lending and introducing more prescriptive requirements for affordability assessments and advertising.

Continued predatory behaviour by mobile traders is also considered, as is extension of the Act to cover credit not currently covered including after pay options.

Mr Faafoi says that the findings of the review confirmed what he has been hearing from budget services and vulnerable consumers across New Zealand.

“Clearly the 2015 amendments to the Act did not go far enough and it is time now to finish the job and protect the most vulnerable consumers.

“I’ve spoken with people who have been given loans that are clearly unaffordable for them, and others who have been lashed with huge penalties and fees. These practices trap people and whanau in an appalling debt spiral that is very difficult to get out of.

“While agencies including our hosts today (Salvation Army and Newtown Ethical lending) are doing what they can to help people, we need to ensure the regulatory settings are right to stop the practices that get people into these terrible situations.

“As a Government we are tackling many of the issues that lead to financial stress, and by 2020 the Families package will see 385,000 families with children made better off by an average of $75 a week when the Package is fully implemented.

“Also getting the credit settings are right, so that people can borrow appropriately when they need to but are not dragged into a long-term debt spiral is another way we will ensure all New Zealanders benefit from a strong and inclusive economy.”

The review of consumer credit regulation discussion paper is available here. Submissions close on 1 August.

27 Comments

  1. Blazer

     /  June 30, 2018

    another issue that National tiptoed around with piecemeal legislation.
    These predatory lenders are…supparating sores on the face of humanity.

    • Kitty Catkin

       /  June 30, 2018

      The last time that I saw this on the news, the footage showed signs of perfectably respectable and above board finance companies who were not loan sharks. I forget who, now, but I should think that these people would have furious at being labelled as loan sharks.

      Loan sharks are an old, old phenomenon. Good luck with changing this.

      The people who default on the loans are to a large extent contributing to the high interest rates. It’s like shops who have to have a margin for loss by theft (and damage, of course) We are all paying extra for that.

      • Gezza

         /  June 30, 2018

        The high interest rates are mostly I think what contributes to the defaults on loans. These people really do prey on the desperate. Not sure if they’re still doing it but a couple of years back WINZ was in the business as well.

        • Kitty Catkin

           /  June 30, 2018

          WINZ doesn’t charge extortionate interest.

          The interest and defaulting are inextricably linked.

          • Gezza

             /  June 30, 2018

            Yes, they are definitely linked, but as I explained, I think you got them the wrong way round.

            • Kitty Catkin

               /  June 30, 2018

              Chicken and egg, possibly, but the lenders need to make a profit so have to allow for defaulters. One thing leads to another.

  2. Zedd

     /  June 30, 2018

    another recent phenomena (?) these ‘shonky’ retail trucks, going around ‘poor suburbs’ selling clothes & electronic equip. (often on credit ?). I also heard some are selling food too, at prices way above supermarket prices.

    They should be shutdown.. or at least be required to follow reasonable retail rules

    • Blazer

       /  June 30, 2018

      been around a quarter of a century at least…2 litres of milk on your a/c =$8..save you going to the Dairy ..love.

      • Zedd

         /  June 30, 2018

        ‘been around a quarter of a century at least’ sez Blr

        maybe so.. but they are recently hitting headlines. ive only seen a couple ‘prowling in Dn’ in the last year or so.

        ‘Piracy in the suburbs’ 😦

      • Zedd

         /  June 30, 2018

        $8 for 2 litres milk.. shocker
        maybe they should bring back ‘milk deliveries’ (only recently disbanded ?) Im sure they only charged ‘rec. retail prices’ (<$4)

    • Alan Wilkinson

       /  June 30, 2018

      Make banks look good, don’t they, B.

      • Blazer

         /  June 30, 2018

        all criminals.

        • Kitty Catkin

           /  June 30, 2018

          They, or their ancestors, have been around for centuries, and possibly longer. They used to be called tallymen. Pay a deposit and a small amount every week and pay for whatever it was ? times over. It’s ancient. People take advantage of the stupid and gullible.

          H/P (paying on the never-never) has been around for a very, very long time, too.

          • Kitty Catkin

             /  June 30, 2018

            I think that milk delivery is long gone, as everyone has to go to the supermarket anyway. The thought of drinking milk that’s been sitting out all day doesn’t appeal .

            • Gezza

               /  June 30, 2018

              I can still remember when we got real, fresh milk & not reconstituted milk powder. I’m sure it tasted heaps better but it was a long time ago now.

            • Kitty Catkin

               /  June 30, 2018

              The milk now is real and not made from powder; this is a myth that has been refuted. As someone said, it would add two steps to the production and add to the cost…there’d be no sense in it, anyway.

              I do use milk powder as for me it’s more convenient to buy a sachet of it and make it as I need it.. It saves money, it’s far easier to transport and I don’t waste milk…or have plastic bottles to dispose of.

  3. david in aus

     /  June 30, 2018

    Treating the symptoms.

    The underlying problem is some people’s inability to see beyond today and immediate wants. Push on one side of the balloon and then another bulge will pop up because these people want the cash NOW. Loan sharks? Banks and credits cards can be still classified as predatory if the borrower has no idea. I pay off the credit card automatically every month and use the rewards, travel insurance which for me exceeds the card fees. And out the rest of my money in a savings account to earn interest.
    Without shame, I rely on those who can’t manage their finance to subsidise me.

    What is really needed is training in some communities on the long-term benefits of delayed gratification. Save then consume later, instead of, borrow and consume now.

    The other side picture of the lender-borrower relationship is being completely ignored.

    • david in aus

       /  June 30, 2018

      To add, what the government should do is allow borrowers of these low-doc loan companies to default with limited recourse. That would be more effective than more-and-more paperwork and regulations.
      Then these companies will either go out of business or have to be very careful to whom they lend to.

    • Gezza

       /  June 30, 2018

      I’m not sure of the extent of it these days but when I was working with Pasifika people for a while tbere was a reasonably common problem of intense family/village/cultural pressure from here & back in the islands for people to contribute money many couldn’t actually afford to village & family projects & events. This put a lot of them into debt when they couldn’t then meet other payments they could previously manage.

      • Blazer

         /  June 30, 2018

        yes,that and their church and keeping up appearances contribute.

        • PartisanZ

           /  June 30, 2018

          The Church of Magog is too compelling perhaps?

  4. Ray

     /  June 30, 2018

    I just hate those retail trucks ripping people off
    But like the loan sharks they fill a need that no amount of laws will cover, National and Labour have tried in the past to no avail, a fool and their money are easy parted!

    • Ray

       /  June 30, 2018

      I think David’s idea of any easy way to default might be an answer but then you get people using strong arm types to enforce repayment. Think a tooled up Headhunter type coming round to collect!
      This already happens in the drug world.

  5. Gezza

     /  June 30, 2018

    A long time ago now, but a couple of decades ago, when we had two viable local butchers here ( fantastic butcher-made real bacon, sausages, & black pud) the one I mostly used had a sign up in his window for several weeks. Can’t remember the exact name, so made one up, but it just said:

    “Earl Scrubbs doesn’t pay his debts”.

  6. PartisanZ

     /  June 30, 2018

    Why do we have to regulate loan sharks?

    Doesn’t the ‘Free Market’ sort these things out all by itself? Doesn’t “rational self-interest” and “the invisible hand” maximize personal benefit which automatically maximizes social good?

    Wait a minute … It does … doesn’t it?

    I’ve invested my whole life … my whole being in believing in it …

    Von Mises, Von Mises, why hast thou forsaken me!?

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