Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Madam Chair. I want to turn to the Credit Contracts and Consumer Finance Act (CCCFA) issue. So I suppose my first question is: the bill which is now the Act provided for a differential approach to be taken to lender and for borrower—it was in section 9E. Why was it that the Minister subsequently allowed the Ministry of Business Innovation and Employment (MBIE) to rewrite the Responsible Lending Code which originally was about 62 pages and turn it into this mammoth 102-page Responsible Lending Code and to include things—specifically a diagram on page 25—that state that lenders are required under 4AK to obtain at least 90 days of transactional records from relevant banks to verify the expenses; to do benchmarking; and not practically make adjustments for that? So here is a document and a one-page diagram setting out how banks and responsible lenders should be looking at lending practices. Why on earth would a Minister pass regulations that did not come back through the Finance and Expenditure Committee to set out such a prescriptive approach that has led to an absolute carnage in terms of lending to both people wanting to get mortgages right through to people trying to get lending for cars or other items? So that's the first question. Why did he allow this Responsible Lending Code to be so prescriptive and basically tell lenders how to go about assessing lending to borrowers?The second point is: why didn't he take a differential approach to different classes of borrowers? The whole purpose of the original Act was to look at high-cost lenders and section 9E gave the ability to do a differential approach. This regulation that only the Minister approved took a carte blanche approach that meant that even regulated financial institutions which are regulated by the Reserve Bank which include our banks through to commercial entities through to approved lenders right through to high-cost lenders—which was the original purpose of the legislation—are captured by the same piece of regulation that only the Minister approved. Why did he do it?And my third major point is: why has he first of all when the problem first arose blamed the banks? And why has he allowed MBIE as late as late last week to still blame the banks for very conservative lending when page 24 of the Responsible Lending Code that he passed requires them to get this information from the borrower?DAMIEN SMITH (ACT): I'd just like to ask the Minister how much margins have fallen on petrol.Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I will respond to the member Andrew Bayly's questions around the CCCFA to start with. And first I do want to thank him and the parties in Parliament who unanimously passed the CCCFA legislation back in 2019 as the whole Parliament recognised it was really important that we pass legislation to protect vulnerable borrowers. And the contributions through the Finance and Expenditure Committee process meant that we passed a law that the whole Parliament agreed on; the banks agreed it was really important also to protect vulnerable borrowers. So that's the first and fundamental point I want to make.This legislation which the member's raising is legislation that the whole Parliament passed and for good reason and is supported by the sector—of course it's also supported by the budget advocates those who find themselves as vulnerable borrowers because of course anybody who's lent money they can't afford can become a vulnerable borrower very quickly.What has then transpired of course is that the legislation came into effect and it was observed that there was a drop in lending in December 2021. That drop of course is seasonal—we do know that in December generally lending drops. Of course December 2021 was actually more lending to first-home borrowers than December 2019 2018 2017 and certainly a lot more than under the previous Government in terms of first-home buyer lending.So none the less that drop was something which attracted a lot of media concern and stories about people who were not able to get a mortgage who wanted to get a mortgage. And I observed that certainly in looking at lots of the media a lot of the stories were about people who did not meet the current loan-to-value ratio (LVR) restrictions—that is they did not have a 20 percent deposit. But the CCCFA as it was newly introduced had become something of a focus for members of the public and banks had said that in some instances people had not received the mortgages they had hoped for because of that legislation.So what I did at that point as Minister was bring forward the review into that legislation. The legislation is quite significant legislation. Again I thank the member and his party and the other parties in Parliament for passing that legislation because it has been described to me as the most significant legislation for the sector since legislation passed during the global financial crisis. That legislation coming into effect of course needed a review as all major changes do. That was scheduled but I chose to bring that review forward because of some of the media concern and some of the cases being raised in the wider context.The challenge of course and the Council of Financial Regulators (CoFR) agencies have been tasked with this is to discern what of the reduction in lending can be attributed to seasonal factors what can be attributed to the global economic conditions the bank's appetite for risk—we know that the major banks have been asked to de-risk their books by their parent companies—what can be attributed to the LVR changes what can be attributed to the increase in rates and so forth? These things are not simple—the official cash rate rise—a lot of these factors of course all play into lending decisions. The banks ultimately make commercial decisions off the back of all the factors at play in the market and that's to be expected. They've returned record profits we've learnt recently of $6 billion—back to Australia—in the past year. They're making commercial decisions as you would expect them to. But of course these have implications for New Zealanders. So we wanted to make sure that the CCCFA was working as intended. We've already signalled some changes we wish to make. And the one that the member refers to is the change to—and I hold up the diagram: he's picked out the bit where there's a big red cross because that is one of the changes we're proposing to make to 4AK(2)(b) around the collection of information because we've discerned that actually we don't think that that is necessary. What is more important is the forward view of the expenses of individuals and their ability to meet the repayment requirements.So I do want to thank the officials who've been working on this the CoFR agencies across Government who've lent their expertise and the banks who've made some very good suggestions and other lenders who have made some suggested tweaks which we have responded to to try to ensure that New Zealanders can access the mortgages that they would desire.