Loan sharks laws look more likely

Law changes to clamp down on dodgy loan sharks look increasingly likely, with Consumer Affairs Minister Simon Power today coming out more strongly in favour of introducing legislation to tackle the issue.

Concerns over loan sharks hit headlines this week after reports that finance company Ferratum New Zealand was offering loans of up to $600 via mobile phone, at interest rates of almost 300 percent.

On Tuesday, Mr Power announced he would hold a summit in August to look at gaps in the system allowing loan companies to take advantage of people facing tough times.

Changes to the Credit Contracts and Consumer Finance Act, which covers the disclosure of credit information to consumers, were possible but voluntary industry initiatives would be considered, Mr Power said.

However, speaking to a parliamentary commerce committee this morning, Mr Power indicated he was leaning towards legislation.

"In recent days, I have told officials that if the result of the summit is that legislative change is necessary, and I'm increasingly coming to that view, without wanting to preempt the outcome of the discussions, then I expect all their resources...to be put to getting legislation in this area moving."

Mr Power said he anticipated the Consumer Law Reform Bill would have its first reading before Parliament rose for the election, but that any recommendations he made as a result of the summit would have to be considered by cabinet.

Labour MP Carol Beaumont questioned whether the August 11 meeting would be all talk and no action, noting that similar summits in recent years had had little impact on consumer law reform.

Mr Power said he could assure the committee he would not be mucking around at the summit.

"It's not to be a talk-fest, there has to be an outcome that we can move on relatively quickly," he said.

"There are interest rate caps, aggressive terms of contract, disclosure requirements, given that we have pulled the public side of the investment spectrum into the sunlight and required them to licence -- whether or not that's an option.

"I'm not ruling any of these things out but before I set officials to work on specific legislative proposals I think in fairness I do need to hear from those communities and those providers."