11. CHARLES CHAUVEL (Labour) Link to this
to the Minister of Finance
Does he agree with John Key’s statement about lenders charging interest rates of 21 or 22 percent that “it is very high, you can’t help but feel that they are taking advantage of their customers and I have made that clear to them personally and directly”?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes, I do agree with the Prime Minister’s statement.
Does he agree that if lenders charging 22 percent interest per annum are “taking advantage of their customers”, then pay-day lenders charging rates of 8 or 9 percent per month, compounding to over 2,000 percent per annum, are in need of even greater scrutiny?
I would have thought that the member asking the question would be aware of that problem. Under the previous Government there was an inquiry into loan sharks. We are still trying to find out whether anything was done as a result of it.
I raise a point of order, Mr Speaker. My question asked the Minister about his responsibilities, not about the record of the previous Government. I would appreciate an answer on that point.
Mr SPEAKERThe member cannot be too specific with a question like that. We heard from the Minister that an inquiry had been done and that he is trying to find out the outcome of it.
Amy AdamsThe average floating mortgage rate as stated by the Reserve Bank is 6.41 percent, which is 4.5 percent lower than it was in June last year, when floating mortgage rates peaked at 10 percent. I do not recall hearing complaints from members opposite then, when interest rates were much higher for ordinary New Zealanders than they are today.
When the Minister’s colleague the Minister of Consumer Affairs says she “is not in favour of imposing controls, as they may cause fringe lenders to exit the market, and thereby deny some consumers the only source of credit available to them”, and that “some lenders have become more flexible in their willingness to help those suffering from indebtedness”, is she speaking on behalf of the Government, or will his Government follow most other OECD jurisdictions and introduce legislation that prevents the charging of usurious interest rates by so-called pay-day lenders; if not, why not?
If there was a simple answer to the problem, then I am sure that the previous Government, which looked into it in some detail, would have implemented that simple answer. As I understand it, the Minister of Consumer Affairs is currently undertaking a review of the Credit Contracts and Consumer Finance Act. A discussion paper will come out in a few months, and there will be an opportunity to put forward those proposals.
I seek leave to table a letter from the Minister of Consumer Affairs containing the statements I referred to in my supplementary question.
I seek leave to table a bill that will be put forward for the next members’ bills ballot. It seeks to impose a maximum interest rate on loan sharks.