17 August 2007 Media Statement

Minister welcomes report on 'fringe' lenders

Acting Minister for Social Development and Employment Steve Maharey today welcomed a new report on 'fringe' lenders in South Auckland, saying it will help raise public awareness about the dangers of borrowing from high-interest credit providers.

The research released today by the Ministry of Consumer Affairs examined the experiences and behaviour of Pacific consumers and why they are borrowing money from `fringe’ lenders.

The report found that the most common reason for borrowing was to meet the needs of everyday household expenses.

“There is a range of assistance available to people who are struggling to make ends meet. People should in the first instance contact Work and Income whether they are a current client or not, to see if they are eligible for such assistance,” said Mr Maharey.

“The Labour-led government has developed a number of support systems, programmes and initiatives for low-income families to help them meet their everyday needs.

"People who meet the criteria could get help with their accommodation costs, the costs of raising children and their disability costs, Mr Maharey said.

"The government has also increased the levels of assistance available through the Working for Families package.

“The risks of borrowing from non-bank lenders are high and people can become trapped in a spiral of ever-increasing debt and misery which is incredibly hard to get out of.

“That is why people should check out if they are entitled to government financial assistance before taking out loans at exorbitant pay back rates.

“We hope this research will send a message that there are other choices for people who need and qualify for assistance than resorting to ‘fringe’ credit providers,” Mr Maharey said.

ENDS

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