Election 2014

6 Nov 2011

National to get tough on credit companies and loan sharks

3:23 pm on 6 November 2011

National Party leader John Key has announced new reforms he says will make it tougher for credit companies and loan sharks to operate in New Zealand.

Mr Key made the announcement during campaigning in Onehunga in Auckland on Sunday, saying there have been reforms in the investment side of the market - but finance remains largely unregulated.

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Mr Key says lending companies have no code of conduct, which has led to exploitation, severe financial hardship and spiralling debt.

"The aim is to ensure that vulnerable people aren't exploited. We do know that there are people who are paying enormous interest rates and putting tremendous pressure on their households as a result of what we think is underhand lending practices and quite inappropriate."

John Key says National would impose legal responsibilities on companies, including the expectation that a loan could be repaid without creating unreasonable hardship and that the lender act honestly and transparently.

A code of conduct would be created. If company fails to comply, the Financial Markets Authority would have the power to cancel its registration.

Under the changes, companies would not be able to use necessary household items, tools of trade, or vehicles worth up to $5000 for security.

Labour Party leader Phil Goff on Sunday accused National of hypocrisy, saying it opposed Labour's responsible lending legislation last year.

Mr Goff says it is purely political for National to pick up this issue now - when it should have acted sooner.