Govt Acts To Limit Interest On Loans
Sun Herald
Saturday April 2, 1988
NEW Business and Consumer Affairs Minister Gerry Peacocke yesterday promised to impose a maximum rate on interest charged by money lenders for short-term personal loans.
The ceiling on unsecured loans is expected to be 48 per cent - a level recommended by the Commercial Tribunal of NSW in a report to Mr Peacocke last week.
The tribunal was ordered in December by former Consumer Affairs Minister Mrs Deirdre Grusovin to inquire whether an interest rate cap would have adverse effect on potential borrowers.
Mr Peacocke said yesterday legislation would be introduced as soon as possible to fix a maximum annual rate for contracts defined by the 1984 Credit Act.
In the past two years, the Department of Consumer Affairs has lodged objections against the licences of some "loan sharks" who have charged exorbitant interest rates.
The department's annual report says some credit companies providing short-term loans of amounts from $200 to $800 have charged interest ranging from 96 to 140 per cent a year.
"Many of the borrowers are needy and unaware of the availability of alternative cheaper finance. The high proportion of re-financed loans suggests a captive clientele," the report says.
Mr Peacocke is expected to introduce an education campaign for borrowers to encourage them to shop around.
The Consumer Affairs Department Commissioner, Mr Philip Holt, who will continue in the post, identified 58 money lenders in NSW (many operating in the Hunter Valley) who charged rates above 50 per cent.
There are about 800 credit providers in NSW.
© 1988 Sun Herald
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