Jones Dail: Consumer Credit Bill — Second Reading 
Jones Dail: Consumer Credit Bill — Second Reading 
[Volume:610;Page:8012] 
DAIL JONES (NZ First) 
: 
 New Zealand First will broadly be supporting this legislation. There are two or three matters that need to be tidied up which hopefully the Government will respond to at some stage. Brent Catchpole the New Zealand First member of the select committee worked particularly hard on this bill. 
Mark Peck 
: He is a very good member. 
DAIL JONES 
: As Mr Peck has said he is a very good member. He is on another select committee at the moment having been I think in Christchurch this morning and back in Wellington this afternoon. It is unfortunate that he could not speak to the bill because I am sure he would do a much better job on it than I am about to do—although I spoke in the first reading and have a broad idea of what is involved in this legislation. 
I see that the Consumer Credit Bill was reported back from the Commerce Committee on 5 August. It went there a little while ago and has come back very promptly and the select committee as a whole is to be congratulated for its endeavours. It was called the Consumer Credit Bill and as I understand it it is now to be called the Credit Contracts and Consumer Finance Bill. So anyone looking for it will get the idea that to some extent it has gone back to the name it used to have—the Credit Contracts Act. But it is now called the Credit Contracts and Consumer Finance Bill and although it says 2002 it will become 2003. 
 One of the areas of concern already mentioned by Sandra Goudie of the National Party is the commencement of this legislation which is very unclear. The commencement as shown in clause 2 states that certain parts of the bill will come into effect when it receives the royal assent other parts when it receives the royal assent and “on a date to be fixed by the Governor-General by Order in Council” and a third section also “on a date fixed by the Governor-General by Order in Council.” 
It would be much more satisfactory for the commercial community and the public generally to know precisely when this bill will come into effect. A tremendous amount of software change will be required to give effect to this legislation and one of the important things about law is certainty. Leaving the commencement as it is will mean members of the commercial community working flat out so that they are not caught out by legislation that might suddenly be introduced in 3 months’ time—only to discover that they have changed everything but the bill does not become law until 12 months later. Certainty is important and during the select committee stage I am sure that other members of this House and other parties in this House will join New Zealand First in setting a date by which those particular sections of the Act are to come into effect. That will avoid uncertainty and a waste of time and costs for the people who have to implement this legislation. 
I was interested to read the Consumers Institute’s submissions. It is always very useful to look at certain highly regarded bodies in particular areas and the Consumers Institute is always a leading body in this area. It was concerned about enforcement procedures when dealing with disputes tribunals guarantors and suchlike. 
Overall I think that the committee has responded well especially with regard to the hardship provisions—something that appears to have been taken from Australian legislation but there is no reason that they should not apply to New Zealand. One of the problems with hardship provisions though is that granting relief to people when they never have any way of getting out of the hole they are in makes it even worse when the day of reckoning comes. I hope the people who apply the hardship provisions contained in the bill bear that in mind and do not automatically grant relief when they are just making it worse for borrowers. As far as lenders are concerned their security or amount owing gets greater and the degree of security is reduced as well. That is something to keep a close watch on. 
With this type of legislation I always look at the views of the New Zealand Law Society and perhaps a Government member will explain to me why the society’s suggestion that the “annual interest rate” be redefined was not taken up. In paragraph 3 of its submission the society stated: “The bill is apparently designed to simplify the concept of the annual interest rate annual interest or finance rate. It does this by defining ‘annual interest rate’ as ‘a rate specified in the credit contract as an annual interest rate’.” 
 That does not take us terribly far. The Law Society states: “This is problematic because it allows a creditor to decide which if any charges and fees to include in the definition which in turn defeats the purpose of facilitating meaningful comparisons between competing credit arrangements.” It refers to the ministry’s consultation document and in looking at the question of the annual interest rate it looks at schedule 1 and the way in which Parliament has prepared key information concerning consumer credit contracts. References are made in schedule 1 to the annual interest rate but apart from a couple of words being changed there do not seem to be many amendments to that schedule. I wonder whether the select committee has done enough to clarify the problem suggested by the Law Society but no doubt we will hear further if problems arise in that respect. 
The question of advances is an interesting one. Various suggestions were made as to the definition of “advances” and I am sure that people will take the matter into account. No change was made to the definition of “cash price” which I thought was a little strange but I guess that will become clearer later on. 
One of the important definitions put into the bill which I am sure all people in the finance industry will be interested in is a clearer definition of “credit contract” in clause 6A. It deletes the reference to “credit contract” in the interpretation clause and puts a special definition of “credit contract” into that provision. 
Members have already mentioned the buy-back provisions which is not a new area. In all of those fields I think it is important that an independent lawyer looks at the whole situation. Unfortunately many of those affected have borrowed far too much and are heavily encumbered. One hopes that there will be a lawyer about who will take the time to look at the proposal because sometimes the documentation is very expensive and the people involved in the buy-back do not have any money with which to do it. The appeal of a buy-back situation is usually that people do not have to outlay any money and on the face of it all it sounds good until they are caught up by the whole transaction. 
Clause 32A requires a creditor to ensure that the contract specifies the annual interest rate or rates and is probably linked up with the Law Society’s suggestion. It seems a strange place to put it but that is where it is—under “interest charges”—and to some extent it will be a matter to take into account with the earlier point I made. 
On the whole this is a very technical bill to do with credit contracts. If anyone out there remains concerned about the way the legislation is drafted I am sure all members of Parliament will be extremely interested in trying to take the matter further.