The New Zealand Association of Credit Unions has called for the reintroduction of rules forcing lenders to declare their actual finance rates and for a cap on interest rates to stop loan sharks.
"Consumers are being ripped off by some unscrupulous lenders charging very high loan fees and interest rates" said Rob Nicholls, Acting CEO of the NZ Association of Credit Unions.
"Seventy directors and managers from 18 NZ credit unions met in Rotorua at the weekend and called for regulation to require full disclosure of the total cost of credit and a cap on the maximum allowable annual rate," Nicholls said.
"Credit Unions are frustrated by the extent to which vulnerable members of the public are being charged extortionist interest rates, the true level of which can only be determined by disclosure of the total cost of credit taking into account all upfront fees and costs associated with a loan," he said.
The removal of the requirement for lenders to disclose the finance rate back in 2003 was a backward step that led to a proliferation of loan sharks, he said. More needed to be done by regulators to ensure that those without financial literacy skills were not drawn to ‘loan sharks’ just because the weekly payment was seen to be affordable.
"Our members will welcome any reforms that see an end to the financial exploitation of those most in need”.
The government’s review of the Credit Contracts and Consumer Finance Act 2003 and the Credit Reforms (Responsible Lending) Bill, which had its first reading at Parliament on Wednesday, were all steps in the right direction, Nicholls said.
Your view? We welcome your comments below? Do you know of anyone being charged extortionate rates by loan sharks?
1 Comments
Hopefully I am not going to see times where people borrow cash online all the time in order to go grocery shopping. I mean all of this is very sad. Everyone is poor enough already and now with costs rising it is such a pressure on our tired from debts nation. You know this country is a big mess. We all work so hard to meet the ends, we work days and nights and what we get instead? We get high prices, unaffordable clothing, high cost rent and many other things that make it so difficult to live a normal life. Life which we deserve to live. So yeah, something has to be done about high interest rates eventually.
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