16 August 2007

Loan sharks report due for release tomorrow

The government’s major report on loan sharking in the Pacific Island Community is due for release tomorrow. It will be launched by Minister of Commerce Lianne Dalziel at a function in Otahuhu. (10.30am to 12.30pm at the Pacific Business Trust, 733 Great South Road, Otahuhu)

The government will also announce its response to the report.

Earlier this year the government announced requirements for money lenders to be registered and belong to a dispute resolution scheme. However this will make no difference to these loan sharks.

However without effective regulations to cover things such as interest rates, set-up fees and penalty payments the dispute resolution service will be little more than a debt collecting agency for the loan sharks themselves.

At the moment it’s business as usual for our cockroach capitalists.

The report to be released tomorrow has been prepared from extensive interviews with families in New Zealand’s low income communities and while the focus is on Pacific Island families the same impacts are felt right across our low income communities as the gap between family income and family needs has widened.

Loan sharks have thrived in this environment and are deepening the poverty felt by whole communities of New Zealanders.

From 2000 to 2004 the percentage of Pacific Island families suffering severe hardship increased from 16% to 30% according to the Ministry of Social Development.

Two years ago we wrote to the Prime Minister suggesting the following steps as a start to curb loan sharks –

(1) Loan Sharking

a. A “simple English” loan form – translated as necessary – would be required for all lending (cash loans, HP purchases, car purchasing, credit cards, mortgages etc) This loan form would feature the amount borrowed; the total amount to be paid back; the finance rate (which includes interest charges and fixed charges) and the number, frequency and amount of repayments.

b. Maximum finance rates would be set for all borrowing and related to the rate of inflation.

c. Penalty rates for non payment would be set at the finance rate applied to the amount overdue.

d. All commercial money lenders would be registered with all loan documents themselves registered (as occurs for bond payments in residency agreements)

e. Failure to register and use the “simple English” loan form would remove any legal redress for a lender.

f. A government funded education campaign for schools and the wider community with information on the dangers of debt and debt repayment.

Tomorrow will tell to what extent the government respects and values Pacific Island people and our families in our low income communities as a whole.

ENDS

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