MP accuses loan sharks of 'racial targeting'

Loan sharks target Maori who need money to go to funerals and Pacific Islanders who have to fly home in emergencies, the government-allied Maori Party says.

MP Rahui Katene is calling it "racial targeting" and has joined calls for the government to act quickly to help vulnerable people.

Consumer Affairs Simon Power said yesterday he would hold a summit in August which would look at tackling "gaps in the system" that allow loan companies to take advantage of people facing tough times.

Mr Power said 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.

His announcement followed questions being raised over loan company Ferratum New Zealand offering loans of up to $600 via mobile phone, at interest rates of almost 300 percent.

Ms Katene said her party had put pressure on the Government about "eliminating the behaviour of these unruly lenders" and was pleased with the summit announcement.

"A former account manager who used to work for these sharks has told us that she was made to target Maori people who needed money to go to tangi, and Pacific Islanders who needed to meet their obligations to their church or fly back to their island for a family emergency," she said last night.

"My office in the eastern suburbs of Christchurch has advised me that loan sharks were a problem before the earthquake and that they are even more of a problem now because more and more of my constituents are turning to them out of desperation."

Labour leader Phil Goff said yesterday law changes were needed now.

"We don't want summits, we don't want talkfests -- we want a piece of legislation that sets a maximum (interest) rate so that loan sharks have to lend below that level, and legislation that says they can't lend knowing that people can't afford typ repay," he said.

Labour MP Carol Beuamont, who last year tried to bring in a member's bill to control loan sharks which was rejected by the Government, said the summit was an election stunt.

"All Mr Power is doing is effectively kicking for touch, knowing full well the timing of his summit will rule out any legislative changes this year," she said.