Brian Kantor argues that scrapping the National Credit Act would allow consumers and lenders freedom to contract and help transform the economic prospects of consumers in the informal economy (Scrapping the credit act would change the lives of millions, July 7). He argues for a completely unregulated credit market, but clearly has no clear understanding of the hardships that vulnerable consumers suffered during the era when the credit industry was unregulated. Before the introduction of the National Credit Act there was widespread exploitation of consumers by lenders with opaque charges and high interest rates. The interest rate under the exemption notice issued under the Usury Act was unregulated and millions of low-income consumers were charged rates as high as 360% a year on small loans. Many opaque fees and charges were added to interest, which pushed some consumers into a debt spiral. It was almost impossible to pay off the debt as the cost of credit kept on rising. Competition...
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