Flavell Te Ururoa: Credit Contracts and Financial Services Law Reform Bill — In CommitteeText is incorporated into the Bound VolumeFlavell Te Ururoa: Credit Contracts and Financial Services Law Reform Bill — In Committee[Sitting date: 08 May 2014. Volume:698;Page:17720. Text is incorporated into the Bound Volume.]TE URUROA FLAVELL (Co-Leader—Māori Party):Tēnā koe Mr Deputy Speaker.Tēnātātou katoa.Tātou e huineiitēneipō. I am standing on behalf of the Māori Party to talk to this bill the Credit Contracts and Financial Services Law Reform Bill introduced by the Hon Craig Foss. In particular I want to give some background to Supplementary Order Paper 445 which is in my name. I also advise that we will be supporting the Supplementary Order Paper from Carol Beaumont. Also of course I think that there is support for the Minister’s Supplementary Order Papers down the line.As electorate MPs we have many people coming to our offices—especially obviously those who are Māori—who suffer at the hands of loan sharks. The loan sharks are behind so many of the problems that constituents bring to us. On the surface the problem might be housing it could be access to health care it could even be shoes for the kids. But these problems have apparently come to a head due to a lack of money. A few questions often reveal that there is huge debt all due to the actions of the loan sharks.What is even more concerning is that a single phone call made from time to time to a loan shark might settle the issue it might settle the problem. Why? Well because loan sharks do not want their activities exposed or scrutinised. They prey on the poor and thevulnerable all under the cloak of secrecy and darkness. They feed on the misfortune of others and they would rather forgo that one single loan in order to keep their business under the radar.So under those circumstances no credit contract is freely entered into. The borrower is already under duress before they even approach a loan shark. They are desperate. They want some money to pay the bills to pay the debts. They have lost control of their financial affairs so they are not in a position really to take responsibility for their credit contracts.The Māori Party certainly supports the thrust of this bill in promoting fully informed decisions around credit contracts. We support the idea of responsible lending with interest rates that are commensurate with the risk of default. We support the idea of willing borrowers and willing lenders entering contracts to meet financial crisis situations. But we also recognise that in many cases these concepts simply do not apply. There remain circumstances where people need protection from these predators and that is why I have introduced a Supplementary Order Paper under my name to provide for a maximum interest rate on loans.The approach we have taken is that the Minister can set and alter from time to time the maximum interest rate. This enables the Minister to take into account for example prevailing interest rates at the time on credit cards. The maximum rate is likely to be a little higher than bank credit card rates. If a borrower does not qualify for a bank credit card because of poor credit history for example a slightly higher rate would reflect the greater risk of default while still making credit available to cover for urgent and temporary need. Even this is not the most perfect situation.Whānau still need to be financially literate to be able to budget and to have enough income to supportwhānau. These are all important issues from the Māori Party perspective and I am pleased to say thatWhānauŌra has had success in guiding families towards taking control of their situation including their financial affairs.But unscrupulous loan sharks remain a problem and it is my hope and my sincere view that the Supplementary Order Paper under my name would be part of the solution. I am pleased to hear that other members of this Committee also think so. I hope that they give serious consideration—and indeed the Minister of Consumer Affairs will give serious consideration—to this effort on our part to address the issue and I commend it for all of us to support.