Home music industry Government accelerates new protections against loan sharks

Government accelerates new protections against loan sharks

0

Hon Kris Faafoi
Minister of Commerce and Consumer Affairs
PANUI PĀPĀHO
MEDIA STATEMENT

Government accelerates new protections against loan sharks due to COVID-19

The government is accelerating measures to protect people in financial difficulty against high cost loans that trap them in debt.

“Amendments to the Law Amending the Law on Credit Agreements aimed at strengthening protections for vulnerable borrowers were scheduled to begin on June 1, 2020. However, due to the disruption and financial problems caused by COVID-19, the government has moved forward. the introduction of certain measures, ”said Minister of Trade and Consumer Affairs Kris Faafoi.

The early introduction of certain protections is part of the COVID-19 Response (Taxation and Other Urgent Regulatory Measures) Bill that is before Parliament today.

The enhanced protections will apply as of the day after Royal Assent of the urgent legislation and mean that:

• people who borrow from high-cost lenders will never have to repay more than 100% of the loan principal,

• compound interest on high cost loans will be prohibited, and

• default charges will be limited to $ 30 (unless the lender can demonstrate that the higher amount reflects its costs).

“These are times of financial stress for many whanau and families in New Zealand. I urge anyone facing financial difficulties to explore other options before taking out new loans. They can discuss other repayment terms with their lender, contact Work and Income for financial assistance, contact Good Shepherd about an interest-free loan, or call the MoneyTalks helpline.

“COVID-19 is putting financial pressure on many New Zealanders and some may have to resort to high-cost short-term loans. The government wants to do everything possible to ensure that vulnerable borrowers do not find themselves trapped in debt spirals.

“The goal is to put in place further consumer credit reforms, including new affordability regulations and new requirements for lenders to meet the fit and appropriate person thresholds in place. from October 1, 2021, “said Kris Faafoi.

Information on support for people in financial difficulty due to the pandemic is available on the site COVID-19 website.

© Scoop Media