No Right Turn has published an excellent guest post from Labour MP Charles Chauvel about his private member’s bill to stamp out loan sharks.
Ever since I became an MP, an issue that I have supported is the regulation of so called “loan sharks”. Loan sharks prey on the vulnerable with unscrupulous rates of interest and this includes many of our Pacific people. They are the scourge of our community and instead of lending a helping hand keep borrowers in poverty. It is common for payday lenders to charge interest at rates between “only” 8% and 15% per week, compounding well into four figures at a time when mainstream rates have declined. Tomorrow, I am expecting a ballot, and if successful, I hope that my Bill will make it on to the order paper.
Increasing numbers of people are pawning items like bikes and children’s toys just to meet essential expenses like their power bill. I saw an elderly man taking his weed eater into a loan shark outfit in Wellington, and it was distressing to watch first hand. One of the worst cases I discovered was a person who borrowed to buy a $3,000 car. The car was repossessed after two months and the owner ended up owing $19,000! If that was not bad enough, Loan sharks use bullying tactics to recover debts such as turning up and parking outside borrowers’ homes. I was present earlier this month at the home of a person who was on the receiving end of this kind of intimidation. The loan shark company had previously broken into this person’s house illegally and taken property that did not belong to the owner.
You can read the rest of the post over at No Right Turn.