MONEYLENDERS

Evening Post, Volume CXVI, Issue 131, 30 November 1933, Page 11

MONEYLENDERS

PiESTEICTIVE POWEES

BILL BEFORE HOUSE

SECOND READING PASSED

The Moneylenders Amendment Bill, which provides for tho annual registration and control of moneylenders, was, read a second timo in the House of Representatives last night. Moving tho second reading, the Minister of Justice (the Hon. J. G. Cobbe) said that when he introduced tho Bill he stated that the object of tho measure was to assist those people who had got into the clutches of tho moneylenders. Since then he 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 information he had received, he had no doubt that the legislation was overdue. In England it had been found desirable to introduce a. Bill controlling the activities of the moneylenders, and the present measure followed closely on 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 on three or four or 4ven more businesses. Under the present Bill mouoylenders would have to pay an annual fee of £15 in respect of every business they carried ' on. Tho Minister said it was considered desirable that moneylenders should be men of. some standing and that only reputable persons should be licensed. Jn thp. city of Auckland alone there wero no fewer than 103 registered moneylenders at the present time. Mr. E. McKcen (Labour, Wellington South): Impecunious Auckland! Mr. Cobbo: From information I have received I think it is desirable that ono or two of them should retire from business. i ENTICED TO BORROW. Referring to tho provisions in the Bill regarding the insertion of advers tisements, the Minister said that misleading advertisements sometimes enticed people lio 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, the 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 pre- . sent 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 be introduced during the Committee stages,, but'they would not affect • the principle of the Bill. ' Mr. T?. W. Schramm (Labour, Auckland East) described the legislation as very necessary and gave complete approval to the proposals. After giving general approval to the principles contained'in the Bill, Mr. H G. X.. Mason (Labour, Auckland •Suburbs.):.said that building societies were exempted from the principal Act, but they could often be very excessive moneylenders, and could charge high rates of interest, their operations being i obscured by the table mortgage system, under which interest and principal pay- 1 ments 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 societies was over 8 percent., there should be authority for the-Goui>t to reopen the transaction in the same way as was provided for ordinary moneylenders. "REALLY SHAMEFUL." In supporting the Bill,' Mr. A. J. Stalhvorthy (Independent, Eden) said that it was really shameful .the way some of the poorer people were exploited by some moneylenders. He quoted a case where a man had borrowed £24 and had to repay £3o within three months. I Eeplying to the discussion, the Minister said that only members could borrow'from building societies and the profits went to the members. _ \ The Bill was read a second time.