Overdue restrictions on loan sharks

Loan sharks ripping off vulnerable people, creating hopeless debt traps, are finally being regulated. This has been a problem for years.

Government crackdown on loan sharks

  • Cap on total interest and fees charged
  • Stiff penalties for loan sharks who break rules
  • ‘Fit and proper person’ test for lenders, door-to-door salespeople and truck shops

The Government is introducing tough new measures to protect people from loan sharks and truck shops, Prime Minister Jacinda Ardern and Commerce and Consumer Affairs Minister Kris Faafoi announced today.

“This Government is committed to making New Zealand the best place to raise a child,” Jacinda Ardern said. “To do that we must stop families becoming trapped in the appalling debt spirals and poverty that result from onerous lending and payback terms.

“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,” Jacinda Ardern said.

The announcement was made at the Vaiola Pl Budgeting Service in Mangere, where the Prime Minister and Minister Faafoi met with people affected by predatory lending as well as budget and financial advice providers.

“The 2015 amendments to the Credit Contracts and Consumer Finance Act (CCCFA) did not go far enough in protecting our most vulnerable consumers from loan sharks,” Kris Faafoi said.

“The introduction of an interest and fees cap on high-cost loans will prevent people from accumulating large debt from a single small loan. For example, if you borrow $500 you will never have to pay back more than $1,000 in total, including all fees and interest.

“The changes also lift the level of professionalism across the industry, by requiring directors and chief executives of lenders offering consumer credit contracts to pass a ‘fit and proper person’ test in order to register as a Financial Service Provider.

“Any lenders breaching the responsible lender principles will face stiff new penalties of fines up to $600,000 under the strengthened enforcement provisions in the CCCFA.

“We listened to consumer advocates and the finance sector’s feedback and will also be seeking increased resources for enforcement and monitoring to ensure lenders who break the law are detected and stopped,” Kris Faafoi said.

The Government is also tackling predatory behaviour by truck shops and others who sell door-to-door on credit or other deferred payment, by requiring all mobile traders to pass the ‘fit and proper person’ test.

The law will also be strengthened to give consumers clearer powers when asking uninvited salespeople to leave their premises, including by strengthening the legal status of ‘do not knock’ stickers, he said.

The new measures will come into effect from 2020, subject to Parliamentary timeframes.

More information on the Review of the CCCFA is available here.

People should be responsible to an extent to their own financial predicaments, especially when they borrow money they can’t afford to pay back, to but exorbitantly priced convenience goods.

But businesses that loan money also have a responsibility to not be predatory, to not engage in impossible to service financial agreements.

‘But the changes won’t take effect until 2020’ is questionable – another urgent problem with a delayed response. Does it really need to take that long to sort out a shitty situation?

Leave a comment


  1. robertguyton

     /  11th October 2018

    “This has been a problem for years.”

    • Gezza

       /  11th October 2018

      ‘But the changes won’t take effect until 2020’

      Still will be.

      • Kitty Catkin

         /  11th October 2018

        There is, alas, a limit to what can be done to protect the stupid from the greedy.

        Anyone who buys things from shop trucks has to be an idiot.

  2. Blazer

     /  11th October 2018

    Many people have become very wealthy by this despicable,usurous practice of predatory lending.
    The collection specialists buy the debt or charge to process people through the courts with attachments to their wages/benefits.
    As usual National introduced a few minor tweaks but largely looked the other way.

    • Corky

       /  11th October 2018

      Loan Sharks, Petrol Prices, Electricity Prices, Super Markets, and Accommodation.

      You socialists cannot control yourselves, can you, Blazer? Ban,regulate, and ban again.

      The government should get out of the market. If you want Communism, become a citizen of China. Oh, that’s right…you cant.

      Labour and China have a few things in common.

      • Blazer

         /  11th October 2018

        ever seen what National and China have in common?
        Go and buy property in China…oh thats right ..you can’t.
        Go and get some free water out of China….oh thats right…you can’t.

        Dr Jiang =National M.P!!!!!!

  3. PartisanZ

     /  11th October 2018

    “‘But the changes won’t take effect until 2020’ is questionable – another urgent problem with a delayed response. Does it really need to take that long to sort out a shitty situation?”

    The response has been “delayed” through four successive governments.

    Considering this “shitty situation” originated with the election of Fourth Labour in 1984, the adoption of neoliberalism and Rogerednomics, what difference does a couple more years of pain and exploitation of the poor really matter …?

    Give the Loan Shark bastards time to find loopholes in and ways around the new legislation …

    • PartisanZ

       /  11th October 2018

      When common social decency is called ‘socialism’ and openly mocked, it’s time to recognize the base individual degeneracy of ‘free market capitalism’ …

      When Injustice becomes Law, Resistance becomes our Duty …


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