Iwi Chairs Forum latest to back call for Government to introduce interest rate cap on personal loans

May 8, 2019

But the minister responsible has come out swinging at those lobbying for such a cap. (Source: Other)

The Iwi Chairs Forum is the latest organisation backing a call for the Government to introduce a cap on interest rates for personal loans.

But the minister responsible has come out swinging at those lobbying for such a cap by questioning whether they're giving groups, like the Iwi Chairs Forum, the appropriate detail.

One woman, who said she was too embarrassed to be identified on camera, was bankrupted after a personal loan spiralled out of control.

"I was paying the 'next-pay' loan and it just got worse and worse and worse and I was basically borrowing off Peter to pay Paul," Lynette said.

Short-term loans like 'next pay' are the target of a call to cap interest rates, with the Iwi Chairs Forum passing a remit at its latest meeting backing the idea.

The Iwi Chairs Forum's Sonny Tau said, "I think it's absolutely critical that we have a cap on interest rates because they can charge anywhere up to 1000 per cent."

The Government is leading a major crackdown on loansharks. Included in its proposals is a 100 per cent limit on the total value of repayments, meaning people won't be paying more than double the amount they borrow.

However. budgeting services charity FinCap, which is leading the charge for a specific cap on interest rates, say the two should go hand-in-hand.

FinCap chief executive Tim Barnett said, "We don't disagree with anything they've said they are going to do but we know it has to go further."

But Consumer Affairs Minister Kris Faafoi isn't buying it.

Mr Faafoi said, "Look, I'd be interested to see what they were told by FinCap, I think FinCap have told a pretty one-sided story about the protections that will be available for consumers."

A cap on interest has also been supported by economists at the Business and Economic Research Limited (BERL) in a report commissioned by FinCap.

The Iwi Chairs Forum - representing 75 iwi nationwide - said they simply want what's best for the most vulnerable in the wider community.

"It's important for us that we approach this thing together and that we add our muscle to those organisations from outside the iwi - the budgeting services," Mr Tau said.

A Parliament Select Committee is currently hearing submissions on the Government's proposed changes.

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