9. CAROL BEAUMONT (Labour) Link to this
to the Minister of Consumer Affairs
Does she think that there is a serious problem with fringe lenders who are lending to vulnerable consumers at extremely high rates of interest or in an irresponsible manner?
Hon HEATHER ROYIs the Minister willing to work with Labour and other parties to find real solutions to the exploitation caused by loan shark activities?
I am willing to talk to anyone, and I have talked with the member on numerous occasions. The fact is that credit and fringe lending is a very complex area that requires comprehensive solutions. As I have said to the member, although her Credit Reforms (Responsible Lending) Bill—which was debated in the House last night—had considerable merit, it was too limited in scope. There would have been undesirable, unintended consequences from its implementation that would have most affected the very people whom it aimed to protect. The Government already has a large number of measures in place to deal with the issues that were raised in Ms Beaumont’s bill.
Why has the Minister delayed work on the review of the Credit Contracts and Consumer Finance Act, which she has consistently provided as an example of the Government’s work on dealing with the problem of fringe lending?
The review of the Credit Contracts and Consumer Finance Act, which the member is referring to, has not been deprioritised, as she has claimed a number of times. It has been reprioritised alongside the consumer law reform. We need to fix the issues in the Credit Contracts and Consumer Finance Act and the Credit (Repossession) Act that are not working, and there needs to be thorough analysis of the impacts on credit providers and consumers.
Hekia ParataWhat legislative reform is the Minister considering that will provide enhanced protection against usurious lending practices for all New Zealanders, and what assistance is currently available until these changes are implemented?
The Government is looking at comprehensive measures to address these issues with real solutions. That includes a review of the Credit Contracts and Consumer Finance Act, work in progress to address problems with credit repossession law, and work in progress to extend the hardship provisions in the current law. There is also work as part of the securities law review that looks at measures to ensure that consumers are treated fairly. By 1 December financial service providers must be registered and belong to a disputes resolution scheme. My consumer law reform process is under way, and the Minister of Commerce and I are working closely to ensure that fringe lenders and unscrupulous lending processes and practices are covered by these measures.
When will the Minister stop reviewing and start doing in relation to the harmful activities of loan sharks, who cause damage to some of our most vulnerable families?
I think the member did not hear the answer to the previous question. We have a number of initiatives under way. The financial service providers legislation introduced by the previous Government, will come into effect on 1 December in relation to the registering of financial service providers. In order to register, all financial service providers must belong to a disputes resolution scheme. The consumer law reform process is under way.
Hon Ruth DysonThis is exactly what I am doing, if the member would like to listen. The consumer law reform process will consider measures to protect vulnerable borrowers, such as protection against unfair contract terms and unconscionable content. It is important that these things happen quickly, and I am working as fast as I can to ensure that they do.