It may not have the numbers to pass through parliament but support is growing for the bill to place more restrictions on loan sharks.
Labour MP Carol Beaumont's private members bill will have its
first reading in the house today.
The bill seeks to prevent loan sharks from charging excessive interest rates.
The Problem Gambling Foundation and the Finance Sector Union are both calling for tougher restrictions on what they describe as a "dodgy" and "devious" industry.
Beaumont's bill would set maximum interest rates on loans and require lenders to reasonably believe the borrower would be able to repay the loan. It also seeks to prevent lenders being able to recover more than they initially lent, in the event of a default.
"Many loan sharks lend out money at obscene rates, without checking to see whether the borrower will be able to meet the repayment requirements," said Beaumont, Labour's spokesperson for consumer affairs.
She said lenders target Maori and Pacific Island communities, and students. Her Consumer Credit (Responsible Lending) Bill would seek to protect those people.
But Prime Minister John Key says he is not convinced an interest rate cap will solve the problem, saying that the maximum rate may be seen as a target for lenders ultimately increasing the cost of credit.
Key said the government is working on a more comprehensive approach by reviewing a range of finance laws.
Despite that, Beaumont wants other MPs to support her bill through to a select committee hearing, and show leadership in tackling the problem of loan sharks.
"To do nothing would be irresponsible and a failure in the eyes of our communities."
Andrew Cassidy, general manager of the financial sector union, Finsec, agrees, and said many countries already have interest rate restrictions and caps.
"If the government votes this bill down, it is denying a public vote to communities who have been devastated by shonky loan shark practices.
"National MPs need to stand up for vulnerable low-income borrowers for once," he said.
One borrower's story
Life is now good for young mum Fofo Molia, but five years ago a trip to a loan shark nearly ruined her life.
Molia borrowed $3000 from a loan shark for a car. But in what seemed like no time, she owed $5500.
"If I had known the repercussions... and how it affected my future, I would never have gone there," she said.
After much struggle, Molia eventually broke free of the loan shark's clutches, but many other people, mostly in poorer areas like South Auckland and Porirua, are not so lucky.
Speaking to TVNZ News at 8, Colin Tukuitonga, chief executive of the Ministry of Pacific Island Affairs says he sees cases like Fofo Molia's all the time, saying "the problem is widespread."
He says a recent Ministry of Consumer affairs report indicates the most common reason Pacific people go to loan sharks, is for basic needs.
"People on low incomes are having trouble making ends meet - and so the loan sharks know there are people needing money. They do as they wish."
He says his organisation's aim is to try to educate people on their options and give people information and understanding about addressing their immediate needs.