Faafoi KrisCREDIT CONTRACTS LEGISLATION AMENDMENT BILLIn CommitteePart 1 Amendments to Credit Contracts and Consumer Finance Act 2003Hon KRIS FAAFOI (Minister of Commerce and Consumer Affairs): It is a pleasure to begin proceedings on Part 1 of the Credit Contracts Legislation Amendment Bill.The bill before us amends the law which regulates the provision of credit in New Zealand to better protect New Zealanders from harms. Before I do get on to some of the details within Part 1 this is in response to a lot of harm that I think certainly colleagues on our side of the Chamber have seen through either constituency work or interaction with the likes of budget services in our communities where we have seen high-cost lending have a pretty detrimental effect on the lives of extremely vulnerable consumers. High-cost lending as it is within this piece of legislation is anything above an annualised rate of 50 percent.This piece of legislation has been on a journey from when it first set out to deal with debt spirals getting out of control for some of these vulnerable consumers and through the select committee process. I want to acknowledge the select committee around the introduction of an interest rate cap.The credit laws impact almost every New Zealander in some way at some point in their life. But be it through a credit card or home loan or car loan or overdraft in some way shape or form borrowing and lending does play an integral role in New Zealand's economy. So borrowing does play a big part. It's at the sharp end or third-tier lenders or loan sharks where we've seen a lot of harm caused. And certainly as a local member of Parliament in Mana through the electoral office in Porirua we have seen quite a lot of case work certainly over my time as the member of Parliament. I did want to point to some of the features of Part 1 and straight to the new clause 10 which does go through some of the lender responsibility principles that are going to be inserted by this legislation which will make obligations for lenders much more stringent. They do pertain to advertising standards for those who are lending and also about borrower information around languages for contracts of credit that lenders will have with their customers.Clause 10(1A) talks about the reasonable steps that should be taken to offer the borrower information about the agreement in another language or language A if the advertising that has sent or caused the borrower to go to the lender is wholly or significantly in language A is being or within the preceding six months has been distributed to the public or a section of the public; and (ii) the steps are necessary to ensure that the borrower can reach an informed decision (for example if the borrower may not have a good understanding of the language in which the lender is otherwise providing information to the borrower under this Act);".Without going too much further that particular feature of that clause is to ensure that if something is advertised in a language—and I'll just use one example; i.e. Samoan—the offer that is made in their advertising must also be used in the process of the formation of the credit contract between the borrower who understood the advertising in that language and the lender in order for the consumer to make an informed decision. This is just one example of some really practical changes that I think we're making in this piece of legislation which I hope will enable those who do go to third-tier lenders again to make what I would call a wise informed and motivated financial decision because I think we've certainly seen in the past a deal a degree of confusion at the consumer end and in some cases some of the lenders preying on that confusion and signing some borrowers up to credit contracts that they didn't fully understand. That's what we're trying to stop as well as—and we'll come to it at a later stage—some of those misunderstandings or confusion turning into large quantities of debt that those families can't afford. But we'll get to that at some stage during the debate."