Tisch Lindsay: Credit Contracts and Consumer Finance Bill — In Committee 
Tisch Lindsay: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8846] 
LINDSAY TISCH (NZ National—Piako) 
: 
 I want to focus very briefly on schedule 1 and in particular on paragraph (s) headed: “Debtor’s right to cancel”. This paragraph is a very important part of the bill. It allows the debtor to pull out of a contract within 3 working days and shows what the process should be for that cancellation. However if I go back to clause 24 I see that that clause refers to the cancellation of a contract. Clause 24(1) “Right to cancel consumer credit contract” states: “(1) A debtor under a consumer credit contract may cancel the contract by giving written notice of the cancellation to the creditor under the contract within 3 working days of the day that disclosure is made …”. It goes on to explain how that will be implemented. 
I have concern with this clause and the Minister may be able to help me. Although I understand the basis of the clause I find no opportunity in it—when a contract has been terminated and the creditor has agreed to the termination—for compensation for loss of value. I refer to two significant submissions in particular. We had one submission from the New Zealand Retailers Association which said: “Consumers who purchase goods on credit should not be entitled to return those goods upon taking possession even if they are entitled to cancel the credit contract because the goods depreciate upon delivery—25 percent depreciation is common.” That is a factor. For people who are in business or involved in any commercial activity once something is purchased then its value depreciates very very quickly. 
I see that Paul Adams wants to take a call later on. I am sure that he would be able to relate that situation to driving a vehicle out of the showroom door. As soon as someone drives a $10000 car a $30000 car or whatever it is out of the door with his or her name on the ownership papers he or she will not get what was paid for that vehicle even if the contract is cancelled within 3 days. I am sure that Paul Adams will take a call and might be able to explain that because he has some expertise in that area. 
Brent Catchpole 
: After a student party! 
LINDSAY TISCH 
: Yes. I am concerned that no depreciation factor is included here and that is a major cost on businesses. It is a loss of opportunity for that money which could be used elsewhere. 
If we look further we see that clause 27(1)(e) which relates to the effect of the cancellation under the schedule states: “unless the contract otherwise provides the debtor is liable to pay to the creditor—(i) any reasonable expenses necessarily incurred by the creditor in connection with the contract and the cancellation of the contract; and (ii) if property is returned to a creditor that has been damaged while in the possession of a debtor the cost of repairing the damage.” 
Another submission put in by the New Zealand Law Society states that clause 27(e) should be amended to enable a creditor to require payment of compensation for depreciation if the goods had been used while in the possession of the debtor. That is a real concern and maybe the Minister could explain to the Committee the issue of goods and depreciation—why once people have taken goods they have paid for the goods are not worth the same value if returned. That is a concern and I bring it to the attention of the Committee.