Russell DeborahDr DEBORAH RUSSELL (Labour—New Lynn): This is an excellent piece of legislation. Like Brett Hudson the previous speaker I am looking forward to working on it and improving it in select committee. But the need for this legislation is real and it is I would hope a piece of legislation that all sides of this House will be able to support all the way through particularly once we've gone through that select committee process. I think it's important for people to understand why we need this legislation. Most people in this House perhaps have not had much to do with the shop trucks that ply their trade in some of the poorest suburbs in our country. Those shop trucks they prey on our lower socio-economic groups. They prey on people with little money and few resources. We refer to them in this bill as mobile traders but the common term for them is a shop truck. So what happens is these shop trucks drive into poorer suburbs—suburbs which often don't have many supermarkets or shops—and they sell products and give credit for people who want to buy from them. Now that might sound quite innocuous but in reading about this bill I found some information about the sorts of prices that these shop trucks charge and they're reprehensible. A can of milk powder: $35. A packet of biscuits: $24. A packet of cereal: $40. A pack of rubbish bags: $50—utterly absurd prices that would never pass muster in a supermarket.So I guess many people think Why on earth would anyone purchase from these shop trucks?" Well they offer credit. So there someone is in her home trying to feed her kids desperately in need of some cereal. Along comes the shop truck offers the box of cereal—at an outrageous price—and offers credit at the same time. That credit is attached to usurious interest rates. From the point of view of the trader of course they charge a high interest rate because there is a fairly high risk associated with it. But in fact if the product wasn't outrageously priced in the first place and if the credit contracts were more clearly understood and if the traders took more responsibility with entering into those credit contracts perhaps our poorest citizens would not end up even poorer through the operation of these shop trucks.So the objective of this bill is to prevent this kind of predatory lending on top of what frankly is predatory pricing as well. The shop trucks—the mobile traders—will still be able to operate. We are not intending to shut down these operations. All that we hope all that we are working towards is ensuring that they trade fairly and reasonably and that they act as responsible lenders. Mr Hudson made some excellent points about the need to ensure that we do have credit available but at a reasonable price.So what does this bill do? Well it introduces some regulations some rules for lenders that all lenders must comply with. One of the first things it does is it ensures that these so-called mobile traders—or shop trucks—have to register as lenders. They have to be registered under the Financial Service Providers (Registration and Dispute Resolution) Act. But they actually can't just offer credit; they have to do it properly. Then once we've done that we can start to put some rules in place as to how they must behave and some of the rules are quite straightforward but they speak to what has been going on in that market. So first of all the mobile traders and others are brought in under some fit and proper person requirements. Now some of those rules are already sitting in there in the Credit Contracts and Consumer Finance Act—the various bits of legislation that surround credit contracts—but it's providing for a process of certification by the Commerce Commission so that anyone who is offering consumer credit must be a fit and proper person and there are various rules as to what that fit and proper person should be.So that's the first step. But then another step is requiring lenders—mobile traders—to make reasonable inquiries as to whether or not a person can actually afford the credit that's being offered. Now Mr Hudson raised some reasonable queries about that as to what sorts of reliance a shop trader can put on what a potential borrower says. That's a good point; we'll look at it in select committees. But in addition to making those inquiries and I think this might reassure Mr Hudson a bit the shop trader—the mobile trader—must keep records of what the inquiries are. Now that might seem like an obvious thing to do but often people don't even keep the records. Now if the mobile trader if the lender keeps a record of what's going on then they can show that they have in fact made proper inquiries that those inquiries were reasonable and that they did establish that the person wanting to borrow money could actually afford to borrow it in the first place. So that's a really simple sort of measure that is contained within this bill.The next one I thought perhaps speaks a little too of what's going on is to do with what language must be used for these contracts. So sitting in clause 14 of the bill—and it introduces new section 17A to the Credit Contracts and Consumer Finance Act—is that if you're advertising in one language you then have to be sure that the person taking up the opportunity actually has a reasonable grasp with that language themselves; the lender can't just use one language and assume it's going to be understood. Now that's critically important. We know we have large communities of migrants who often come to New Zealand and while they may speak a little English they may not speak it well or they may not have had the opportunity to learn to speak it well yet and yet they enter into these contracts. So by ensuring that lenders must communicate in a language that is understood by the person who's doing the borrowing that matches up with the advertising—it seems completely fair and reasonable to me. That's the sort of change that is going to be brought in by this bill and again it will protect some of our most vulnerable consumers.So there are all these sorts of ideas sitting in this bill as to what we can do in order to protect our most vulnerable consumers to protect people who might get caught by onerous lending. For that reason I think this is an excellent bill. I am looking forward to the process of examining it in the select committee to make sure that we get the balance right. But may I suggest that in this case getting the balance right means absolutely ensuring that we protect the poorest in our communities. I commend this bill to the House."