Coddington Deborah: Credit Contracts and Consumer Finance Bill — In Committee 
Coddington Deborah: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8708] 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise to address Part 2 of the Credit Contracts and Consumer Finance Bill. In particular I want to speak to clause 9 “Meaning of consumer credit contract” which states: “(1) A credit contract is a consumer credit contract if—(a) the debtor is a natural person;”. That is the provision that excludes businesses from the bill. As Simon McArley a senior partner in KPMG Legal wrote in the  
National Business Review  
in October last year: “Small business appears to be the loser in this review of credit legislation.” That is a really important point because we have heard a lot of talk about compliance costs. The Minister in the chair Judith Tizard will say that small business was left out of the provisions in order to reduce compliance costs but that is simply not the case. After six discussion papers we still cannot get this legislation right. 
The Government sees that there is a power imbalance between lenders and borrowers and it wants to redress that so-called imbalance and provide the vulnerable with more clout. Of course there is a power imbalance between lenders and borrowers. Lenders should always be in the more powerful position when they lend money. Often it is not their money. It often belongs to a bank or a finance institution and is money that people have invested. Often those people are mum and dad investors who are investing money for their retirements something that this Government is deemed to be encouraging and which other parties in the Chamber say they are encouraging. When money is lent there is always a lender of that money. There is never a borrower without a lender. The lender should always be in the more powerful position. 
I go back to my point that this bill excludes those who borrow for business purposes. They are left to fend for themselves. It is often said that New Zealand is a country of small businesses. Some 80 percent of businesses in this country employ fewer than five people. Those businesses share the same concerns and problems as the average consumer in New Zealand. What is so different about the concerns of the average consumer from small businesses? Most small-business people borrow money as a consumer in order to support their businesses. What about the small-business person’s spouse? As Simon McArley wrote: “Ignorant of the inside workings of the business [they are] asked to incur personal liability for the business debt.” The courts have long recognised that those guaranteeing spouses required special protection but that is not provided by this legislation. Perversely even the limited guaranteed disclosure provided by the Credit Contracts Act will be taken away as Simon McArley noted. 
As I said earlier in the debate on this bill the bill protects big business as they have the resources to hire hard-nosed lawyers and engage them to ferret out unfair terms and wield commercial leverage but I say that the reality is that mini-businesses—80 percent the vast majority of businesses in this country—are in no stronger position than the average consumer and this legislation leaves them to fend for themselves. It does not reduce compliance costs. It is difficult to see how leaving small business out in the cold is a consequence of making big business seek legal advice rather than providing clear and practical disclosure from their banks. 
Can the Minister explain that? How does exclusion from a simplified statutory procedure for obtaining remedies as that is meant to be reduce costs? It does not. It increases compliance costs. 
This is typical of this Government which talks about reducing compliance costs on the one hand and on the other hand works so hard behind businesses’ backs at increasing compliance costs. We see it again and again with legislation that comes before the House.