Connell Brian: Credit Contracts and Consumer Finance Bill — In Committee 
Connell Brian: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8710] 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 The issue of brokerage is so important I want to revisit it. I refer the Committee to Subpart 2 “Required disclosure”. Clause 15 states: “Every creditor under a consumer credit contract must ensure that disclosure of as much of the key information set out in Schedule 1 as is applicable to the contract is made to every debtor under the contract”. For a moment I want to skip back to clause 3 “Purposes” which states: “The purposes of this Act are—(a) to protect the interests of consumers in connection with credit contracts consumer leases and buy-back transactions of land; and (b) to provide for the disclosure of adequate information to consumers under consumer credit contracts and consumer leases”. I ask the Minister in the chair to think about this: the purpose is defeated if brokers’ commissions are not declared because they do not form part of the contract. 
Hon Judith Tizard 
: They do. 
BRIAN CONNELL 
: They do not. They are simply a fee for service. They do not form part of the contract. I have been in the industry and I ask the Minister to have a look at this again go back to her advisers and say that she thinks they may have it wrong. I fear that some of the finance companies will change their constitution over night and will start becoming brokerages. That will simply defeat the purpose of what the legislation is trying to do. It will avoid disclosure and the very people whom this bill is trying to protect will escape this clause. If we are dealing with this as a very serious matter then I ask the Minister to rethink it. I understand from the Minister that there is an opportunity to revisit this. My passionate plea is: “Let’s do it once and let’s do it right.” There is no need to go back to this if we address this issue seriously and deal with it right now. 
The other issue that concerns me—and others have mentioned it—is that of compliance costs. Having worked in the industry I know that what has been suggested here particularly under the hardship provisions is going to drive the industry mad. It will not be enforceable unless there are huge changes to forms to audit systems and to financial systems. Imagine the back-office systems that are in play here! Imagine trying to deal with systems—hard-drives and floppy discs. The whole thing will need to be reworked. Back-office functions have been established and set up under a technology called credit scoring. Credit-scoring systems are very complex yet this bill is undermining the industry because it will not be able to price for risk—because it will not be able to evaluate the risk. How does the industry evaluate the risk that suddenly someone will say: “I’ve had a bad-hair day and I want to get out of my contract.”? How does it deal with that? How does the industry evaluate the risk of someone saying: “He doesn’t love me any more so I want to get out of my contract.”? We are simply not constructed as an industry to be able to deal with that type of issue. We need to think this through. Again I go back to the point I raised in an earlier call when I asked the Government to go back to the steering committee with this and rethink the issue. It is a very very important issue. 
Hon Judith Tizard 
: The select committee went through it in some detail. 
BRIAN CONNELL 
: Well if it did I can only assume the issue was not clearly understood because it is still on the table for debate. [ 
Interruption 
] There is “one rule for MP Harry Duynhoven and one for the rest of us” calling out again. There he goes again. 
 Why does he not do something constructive—like resign? Oh he did did he not? We forgot about that. [ 
Interruption 
] 
The CHAIRPERSON (Ann Hartley) 
: Order! 
BRIAN CONNELL 
: I think the member was inviting me to take out dual citizenship. I refer now to compliance costs and I know the member is upset because it is a very sensitive issue for him. He does not really understand it. He has been a ticket clipper all his life. I can tell the Committee that this is an issue—[ 
Interruption 
] I raise a point of order Madam Chairperson. I understand that a running commentary is outside the Standing Orders. 
The CHAIRPERSON (Ann Hartley) 
: Yes it is. I have called for order. 
BRIAN CONNELL 
: I am simply trying to say in a constructive way that the issue of compliance is something that has not been thought through and clearly understood. The issues around the operations of back-office systems the complex computer systems and credit-scoring systems that underscore that are important.