The ''loan shark Bill'' is set to strengthen protections
for borrowers but a Dunedin budgeting advice service hopes it
has enough ''teeth'' to protect the vulnerable.
The Credit Contracts and Financial Services Law Reform Bill -
nicknamed the ''loan shark Bill'' - passed its first reading
this month and has been sent to the commerce select
Consumer Affairs Minister Craig Foss said the Bill would
''crack down on unscrupulous lenders'' who left borrowers
trapped in ''a spiral of uncontrolled debt''.
The Bill would result in more ''informed borrowers and
Many lending organisations were already tightening up their
behaviour but the lender must seek ''honest and upfront''
information from a borrower.
''Those that prey on others, sadly, will continue to do so.
What this [Bill] does, though, is make it much harder for any
organisation, big or small, to exploit anyone's
Door-to-door truck shops were motivation for the Bill, Mr
Foss said. The target of the Bill is ending exploitation.
Anglican Family Care director Nicola Taylor, of Dunedin, said
she had heard sales-truck companies often provided little
borrowing information to customers.
Borrowers needed to ''stand up'' and question lenders, she
''This law reform is a very good start, but it's also
education and awareness for the more vulnerable that are
exploited. They don't stand up for their rights.''
If the Bill had enough ''teeth'', it would, hopefully, result
in fewer people in debt coming to the family support service
for budgeting advice.
'Loan Shark' Bill
Changes proposed in the Credit Contracts and Financial Services
Law Reform Bill include. -
• Making it illegal to lend money to someone whose loan
repayments would be likely to result in substantial hardship.
• Requiring lenders to properly consider applications by
borrowers for hardship relief.
• Requiring more timely and complete disclosure of loan
terms, and extending the ''cooling off'' period for borrowers
to cancel their loan.
• Better controls against misleading, deceptive or confusing
• A new code of responsible lending which will allow for
lenders to be banned from the industry for non-compliance.
• Providing that borrowers will not have to pay the cost of
interest or fees if their lender is not a registered
financial service provider.
• Preventing goods from being repossessed unless they are
specifically identified in the credit contract and limiting
essential household items from being listed as securities.
• Licensing of repossession agents and employees.
• Strengthening powers to prevent certain entities or
individuals from becoming registered financial service
providers or to revoke their registration.