Goudie Sandra: Credit Contracts and Consumer Finance Bill — In Committee 
Goudie Sandra: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8842] 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 In speaking to Part 6 I laud the excellent contributions from my colleagues Lindsay Tisch and Don Brash. I also acknowledge Stephen Franks because I valued his contribution and I see that he has an amendment on which I am sure he wishes to address the Committee during the debate on this part. I would appreciate hearing from him and I hope that he will get a further call. 
In speaking to this part I recall that no reason was given for the introduction of this bill so one can only presume that the reasoning was that there was a growing concern about people entering into credit contracts and that there was an increasing problem with regard to people finding themselves in difficulties with their creditors. Hence one presumes we have this bill to deal with the issue of those people who enter into credit contracts and get themselves into difficulties. It has been said that while this bill is predominantly about disclosure for the benefit of people who have a limited understanding of these particular contracts the starkest way to bring home to consumers the meaning of a credit contract would be to have nothing on the first page of the contract other than the total sum payable in large black letters. I cannot emphasise that to members enough. Many people think they have a degree of understanding when they enter into credit contracts but often they do not particularly when they have limited literacy and numeracy skills. 
First of all I will carry on with the comments made by my learned colleagues on Part 6 “Miscellaneous provisions”. Clause 111 states: “(1) The Governor-General may by Order in Council make regulations for all or any of the following purposes:”. In doing that he or she can change the information that must be disclosed. We already know from many many submitters that it could cost some people hundreds of thousands of dollars to change their documentation and processes as required by the disclosure requirements. If at any time the Governor-General issues an Order in Council to institute a difference in the disclosure requirements that results in a change to the documentation that will activate an additional compliance cost to be met by all those creditors who have to comply with those requirements. That is of concern and my colleagues have expressed our concern at that. 
Clause 111(1)(f) states: “prescribing model disclosure statements that comply with section 29 and the terms and conditions on which the model disclosure statements may be used:”. I put it to members that “may be used” is not correct; I would have thought that they had to be used. Thus we enter into that whole realm of compliance costs. Those compliance costs will actually be ongoing. There was quite a substantial compliance cost in an earlier version of the bill. However some assumptions associated with that cost were not correct and were challenged by submitters to the Commerce Committee. It was quite clear that those assumptions were not correct and that there will be an ongoing cost because of the requirement for creditors to continually monitor their performance and to have programmes to monitor their compliance with the legislation. 
I will move on to subclause (1)(ia) which provides for “prescribing the form of the certificate that must be given under section 58C:”. Clause 58C refers to the buy-back provision. In that situation the creditor has to ensure that every occupant of a house gets legal advice. I would like the Minister in the chair the Hon David Cunliffe to take a call and perhaps explain to us why the bill requires that every occupant of a house where someone from the house is to be involved in a buy-back scheme has to have legal advice and why the creditor has to ensure that. Perhaps he would like to explain that further and clarify that little provision which relates to prescribing the form of the certificate that must be given under clause 58C. 
I too would like to raise the concerns that have been mentioned concerning clause 114(3).