Prime Minister Jacinda Ardern and Commerce and Consumer Affairs Minister Kris Faafoi say that new laws are needed because:
“This Government is committed to making New Zealand the best place to raise a child...to do that we must stop families becoming trapped in the appalling debt spirals and poverty that result from onerous lending and payback terms...These new measures will halt the very worst of those preying on vulnerable and desperate people while enabling borrowing that meets their needs in an affordable way... They will protect families through capping the total interest and fees charged loans, introducing tougher penalties for irresponsible lending
Interest and fees on high-cost loans will be limited to 100% of the amount borrowed (the loan principal). For example, if an individual borrows $500, they will never have to pay the lender back more than $1000, including all fees and interest.