Law change targets loan sharks

By Phil Boeyen, ShareChat Business News Editor

Thursday 9th August 2001

The Government is changing the law to clamp down on shoddy finance practises.

It's announced plans for a new Consumer Credit Bill to replace the Credit Contract Act and the Hire Purchase Act.

Consumer Affairs Minister, Jim Anderton, says the Ministry of Consumer Affairs has highlighted two new examples of companies who have been acting in ways that are not acceptable.

He says in one case a business has been using some contracts that do not disclose any financial information and charge excessive fees. Another firm was putting stiff penalties onto early repayments for vehicles and inflating the price of vehicles on the contracts.

"Although many of these practises appear to be unlawful anyway, these reforms will send a clear message to all bad loan companies that we will no longer let them get away with ripping people off," says Mr Anderton.

"The old credit legislation was out of date, complex, difficult to understand, and gave consumers very little clout against unfair behaviour.

"The new bill will modernise the law and will be designed to cater for existing credit practices, including the growing computerisation of banking and loan services.

Under the new law consumers will have increased clout for redress with the help of a public enforcement agency.

"Lack of enforcement is a key problem with the current legislation, as it relies on consumers taking action themselves against lenders," Mr Anderton says.

Although the Government is assuring responsible credit and lending institutions such as reputable finance companies and banks that they have nothing to fear, it says evidence from the Ministry of Consumer Affairs showed that marginal lenders and lenders of last resort regularly breach the law.

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