MONEYLENDING.

Auckland Star, Volume LXIV, Issue 283, 30 November 1933, Page 20

MONEYLENDING.

STRICTER CONTROL. APPROVAL OF NEW BILL. EXPLANATION SY MINISTER. (By Telegraph-—Parliamentary Iteporter.y WELLINGTON, this day. There are over one hundred' registered moneylenders in Auckland, according to a statement made by the Minister of Justice, tho Hon. J. G. Cobbe, in the House last night, when moving the second reading of the Moneylenders Amendment Bill. Mr. Cobbe said that when lie introduced the bill he had stated that its object was to v assist those people who had got into the clutches of moneylenders. Since then lie had had communications from members .of moneylending firms of good standing, expressing satisfaction with the terms of the bill, which would have a very desirable effect. From the information he had received he had 110 doubt the legislation was overdue. In England it had been found desirable to introduce a bill controlling the activities of moneylenders, and the present measure followed closely the lines of that legislation. In the past moneylenders had had to pay a registration fee of £1 for three years, and that entitled them to carry oi\ three or four or • even more businesses. Under the present bill the moneylenders would have to pay an annual fee of £16 in respect of every business they carried on. It was considered desirable that moneylenders should be men of some standing, and that only reputable persons should be licensed. In the city of Auckland alone there were no fewer than 103 registered moneylenders at the present time. Mr. R. McKeen (Labour, Wellington South): Impecunious Auckland! Mr. Cobbe: From information I have received I think it is desirable that one or two of them should retire from business. Regular Contracts. Referring to the provisions regulating advertisements, the Minister said misleading advertisements sometimes enticed people to borrow money against their better judgment. Many people borrowed money without knowing what it was going to cost them, and the bill made the very necessary stipulation that there should be a regular contract for every loan transaction. It was also provided that on the payment of a small fee a borrower could procure a statement as to how his account stood.

Dealing with the question of interest, the Minister said he had discussed that matter with a moneylender, who had informed him that under the law as it stood at present it was possible to make a person actually pay anything between 300 and 400 per cent. The bill fixed the maximum interest that could be charged at 48 per cent. That was admittedly a high figure, but it had to be remembered that a lot of loans were advanced on little or no security. The rate of 48 per cent was also fixed by the English Act. The Minister intimated that one or two amendments would bo introduced during the committee stages, but they would not affect the principle of the bill. Building Societies. After giving general approval to the principles of the bill Mr. H. G. R. Mason (Labour, Auckland Suburbs), said building societies were exempted from the principaj Act, but' they could often be very excessive moneylenders, and could charge high rates of interest, their operations being obscured by the tablemortgage system; under which interest and principal payments could only be separated by a person with high mathematical knowledge. Very often these societies were formed by groups of moneylenders, who obtained high rates of interest on good securities. When the rate of interest charged by building socjeties was over 8 per cent there should be authority for the Court to leopen a transaction, in the same way as was provided for ordinary monevlendere. ' "Borrowed £24—Repaid £35." In supporting the bill Mr. A. J. Stallworthy (Independant, Eden), said that the way sonic of the poorer people were exploited by some moneylenders, sometimes having to pay up to 400 per cent interest, was really shameful. He quoted a case where a man had borrowed £24 and had to repay £35 in three months. Replying, the Minister said that only members could borrow from building societies, and the profits went to members. . s The bill was given its second reading.