Loan sharks must be reined in


In recent days the Government has announced moves to address the issue of loan sharks. The move stems from ongoing concerns about the vulnerability of people on low incomes needing to borrow money, but who might not be aware of the pitfalls. And it is not a move without some political baggage as an earlier attempt by the Opposition to pass a Bill of Parliament into law failed.

On the whole it is certainly welcome news. The concept of a loan shark is the offering of a loan of money that has a very high interest rate on its repayment. Such activity is seen by many as highly unethical, bordering on illegal and of a very predatory nature such as that which goes with a shark. The consequences for those who have been caught out can be very painful financially. But it is often more than just financial pain that is inflicted. Being prey for loan sharks can cause hugely stressful personal situations, shame for families and humiliation for any children involved if it is found out that their parents were taken by such activity.

However it should be noted that a Bill of Parliament by Labour Member of Parliament Carol Beaumont was defeated in 2010 63-58 when National and A.C.T. voted against it, claiming there were significant flaws and that they could do a better job dealing with offending loan sharks. It was not until 2013 when a Government Bill of Parliament was introduced by National Member of Parliament and Minister of Commerce, Craig Foss, that the issue came back to Parliament.

Do the new rules and the attendant heavy fines go far enough? That is something which will be determined in time as the implementation of the new laws will not be started until June. Perhaps it is appropriate to further suggest that those will now be required to register, not be allowed to have a criminal record of any sort, especially of a financial nature.

But hopefully it will be the start of a much bigger reform of how the financial sector at large operates. Whilst for several legitimate and perhaps not so legitimate reasons this is highly unlikely it would be nice to think that anyone else or any companies thinking of setting up loan schemes that have high interest rates might be persuaded by the new laws to take a look at what they want to achieve – and whether or not they are willing to conform.

One thought on “Loan sharks must be reined in

  1. Very true, and ANY lending institution should have a ceiling limit on all fees they charge, hidden or otherwise. The fact that some banks charged people to withdraw their own money from ATM’s even if they only withdrew Euro 10,– is criminal in my opinion.
    That penalises people who can only afford to withdraw the minimum each time. They also need to stop all “bonuses” for banks that had bailouts with public funds, the argument that bonuses help keep the top talent is hogwash, let them try being unemployed and then see how careful they see how they need to be with money.
    Both bank fines for misconduct and on loan sharks need to be far more substantial than they currently are too. Education needs to start in schools about money management, budgeting, the true costs of a loan , how interest payments work etc. That would hopefully help future generations not fall foul of loan sharks.

    Like

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