Kiwi new rules to crack down on predatory lenders to take effect this month

New rules to crack down on New Zealand's predatory lenders will take effect this month, the government said Wednesday, but critics say more is needed to rein in loan sharks.

"A new era in consumer lending begins this Saturday where all lenders must meet responsible lending obligations and consumers have access to better information to help them make better borrowing choices," Minister of Commerce and Consumer Affairs Paul Goldsmith said in a statement.

The Credit Contracts and Consumer Finance Amendment Act would give greater protection to consumers when borrowing money and help ensure they could afford to repay debts.

"The law introduces harsher penalties for lenders who don't follow the rules which the Commerce Commission will enforce," said Goldsmith.

One of the key changes is the introduction of lender responsibility obligations.

Other key changes include compulsory publication of lenders' fees and interest rates, mandatory licensing of repossession agents and a ban on repossessing essential household items.

However, the opposition New Zealand First party said New Zealanders still face extremely high interest rates from loan sharks.

"What was needed was a maximum cap on the rate that could be charged to protect people who cannot borrow anywhere else," social development spokesperson Darroch Ball said in a statement.

Such restrictions came into force in Australia on July 1, 2013, and in Britain in January this year, after both countries found no alternative.

"Britain was one of the last in the EU (European Union) to implement them. The U.S. is implementing a cap across the whole country with 85 percent of states already protecting people in this way," said Ball. Endi