Labour consumer affairs spokeswoman Carol Beaumont said a Labour government would make it illegal both to charge exorbitant interest rates or exploit uniformed borrowers.
The policy would mean working with at-risk families to improve their budgeting skills and developing financial literacy programmes in conjunction with community groups and schools.
Labour would work with more banks to establish social lending schemes to provide no-cost or low-cost loans.
''These loans aim to provide a social benefit, rather than a profit result, for people who can't easily access mainstream financial services.''
Credit unions could play an important role in consumer finance both by increasing choice and providing an alternative to loan sharks, Ms Beaumont said.
Labour would reform the law so credit unions could expand their services and cut their costs.
Last month, Social Development Minister Paula Bennett launched a community finance pilot scheme which saw StepUp low-interest loans available in Manukau and Waitakere.
Community finance would help people with borrowing for assets they needed for employment, education and a better quality of life, she said.
The scheme was a public-private partnership between the Bank of New Zealand, Good Shepherd New Zealand, the Salvation Army and the Ministry of Social Development.
The BNZ-backed loans offered good discounts from market interest rates and were free of traps such as fees and savage penalties which other, less ethical, lenders charged, Ms Bennett said.
The loan shark policy was one of several aspects to Labour's consumer affairs policy.
Ms Beaumont said the Reserve Bank governor would be able to set the maximum interest rate that could be charged under a consumer credit contract.
The governor's determined rates would be enforced by Order in Council.
Social lending was also in the policy, to cover loans to not-for-profit organisations and small business development, plus could be used to assist affordable housing or anti-loan shark programmes.
Ms Beaumont said social lending was small scale in New Zealand but there was an opportunity to use it to minimise opportunities for predatory lenders.
''There is definitely an appetite among the private sector to operate in a more philanthropic space but a key part of advancing any scheme is Government taking a leadership role and partnering with community organisations.''
Labour would:
• Pass legislation to make exorbitant interest rates and exploiting uniformed borrowers illegal.
• Increase the minimum wage by $2 an hour in its first year.
• Work with more banks to establish social lending schemes to provide no or low-cost loans.
• Work alongside educators, community groups and schools to encourage, develop and support financial literacy programmes.
