Bradford Sue: Consumer Credit Bill — Second Reading 
Bradford Sue: Consumer Credit Bill — Second Reading 
[Volume:610;Page:8015] 
SUE BRADFORD (Green) 
: 
 The Green Party welcomes the Consumer Credit Bill back to the House for its second reading and is pleased that this useful and socially reforming legislation is being enacted in a much more timely manner than some of the other bills we have dealt with in this Parliament lately. 
The Green Party has been keen to see improvements in controls and accountability in relation to lenders particularly those operating at the third tier or bottom end of the market. For a long time debt has been identified as one of the main factors in the ongoing reliance by beneficiaries and other low-income people on both food banks and on that endless cycle of recoverable and non-recoverable supplementary assistance from Work and Income. Debt entrenches poverty and exacerbates the problems of individuals and families already having a hard time surviving. Debt has got out of control in this country and for those least able to obtain it and least able to understand the conditions under which they are obtaining it there has been far too little protection against the degradations of exploitative lenders. Many examples of this have littered our daily newspapers over recent years. 
This bill was the product of an extensive review of consumer credit law undertaken over 2 years between 1999 and 2001. I think that the overall support for it from a broad and diverse range of submitters during the select committee proceedings was an indication that the consultation process has worked pretty well. A large number of amendments were made during the select committee process many of them technical with others going to shore up and strengthen the intentions of the bill. 
The Green Party was particularly concerned to make sure that some hardship provisions were included in line with legislation like the Australian consumer credit code. We were disappointed that hardship provisions had been omitted in the first draft of the bill under consideration. We were therefore delighted that the select committee and the Government in particular saw fit to support our call and that of a number of submitters to incorporate hardship provisions in the revised bill as reported back to the House. With the addition of these provisions the bill now provides for far more adequate protection for people who suddenly or unexpectedly find themselves in difficulty and need some tolerance from creditors so that they can for example pay off what they owe over a longer period. We believe that this is a better situation from the perspective of both debtor and creditor. Creditors have a greater likelihood of recovering what is owed and debtors do not face having goods repossessed and a black mark on their credit rating as long as they can make good the loan over the longer renegotiated term. 
The hardship provisions that we have supported include ensuring that someone who becomes ill is injured loses his or her job or suffers the ending of a marriage or similar relationship can apply to the creditor to change the terms of his or her contract with the creditor. The bill makes it clear that such an alteration to the contract must be fair to both creditor and debtor and I really do not think that fears held by some submitters from the lending community in this area will come to pass. After all many reasonable creditors are already willing to renegotiate contracts in these types of situations. What the revised bill is doing is ensuring that this opportunity is afforded right across the board instead of just to some. 
When we first looked at the bill we had several other reservations besides the hardship clauses. One of these was in the area of small business. We felt that small-business people needed as much protection as anyone else when taking out loans especially given that many of them are on the same low incomes as personal borrowers. However during the select committee process I was convinced by the arguments of officials that most small businesses would be disadvantaged if they came under the new Act because the cost of credit would be higher due to the greater compliance costs associated with consumer lending and that the small-business people with whom they consulted understood this and did not want to be included under this legislation. 
Another area of concern for the Green Party originally was around the definition of “oppressive contract”. We felt that the definition of “oppressive” was too narrow and should have been broadened to include a wider and more explicit range of factors. However again I was persuaded by advice given to the committee that the meaning of “oppressive” has been subject to considerable judicial interpretation and that what has been lacking has been the ability of ordinary consumers rather than commercial borrowers to take action against oppressive lenders. I see that Mr Jones is nodding. I think he understands the situation. 
This bill gives the Commerce Commission additional enforcement powers so that disputes can be heard in the regular court system and the commission itself will be able to take proceedings on behalf of consumers. I hope that this will indeed help the development of good case law around the meaning of “oppression” as it relates to individual borrowers as well as upping the ante considerably and stamping out the worst practices of certain lenders. 
I turn now to the new section of the bill dealing with buy-back transactions. The Green Party is delighted that the Government had the will and the capacity to act quickly enough on this to incorporate a new section dealing with the land and housing buy-back scams that have been perpetrated against hundreds of unsuspecting people in recent times. We believe that the State does have an obligation to protect the vulnerable and people are never quite as vulnerable as when they have their homes stolen out from under them by quasi-legal fraudsters. Some of the interest rates and charges found under the buy-back scams make even the worst of third-tier lenders look pretty good. Thus we welcome the addition of amendments to this bill which include ensuring that independent legal advice will be given to protect occupiers involved in buy-back transactions; that consumers will be offered as much advice as possible about the dangers of these schemes; and that there is full disclosure at every step just as in any other credit contract. 
I believe that this bill will go a long way towards ending some of the worst excesses scams and frauds that have been perpetrated on large numbers of New Zealand people. I look forward to its being signed into law in the very near future so that the much fuller protection it provides will be afforded to all who need it as soon as possible.