The Government has admitted its brand new lending rules are already inadequate, says Labour’s Consumer Affairs Spokesman David Shearer.
“Gaping holes in the Responsible Lending Code – which came into effect this month -- mean the vulnerable will not be protected.
“Mobile truck shops are not covered by the code, even though they target the poor, elderly and mentally ill in low-income areas and charge exorbitant prices for basic necessities and food.
“And unlike nearly every other developed country, the Government refuses to set a cap on interest rates. Loan sharks can charge whatever interest rate they want and there is no comeback for the borrower.
“Now we have Consumer Affairs Minister Paul Goldsmith conceding in select committee that it would have been better if the new code required sellers to reveal the true cost of any payment plan, including the interest, and not just the per-week cost.
“One family I have been in touch with bought a car worth $2,500. They are now facing a $23,000 bill once the interest has been paid off.
“It’s absurd that a code that came into being less than a fortnight is already considered to be inadequate.
“This government simply doesn’t care about the more vulnerable in our society.
“It’s an issue that could be fixed so easily, but old free market ideology is preventing National acting when most New Zealanders would consider it common sense,” David Shearer says.