Catchpole Brent: Credit Contracts and Consumer Finance Bill — Third Reading 
Catchpole Brent: Credit Contracts and Consumer Finance Bill — Third Reading 
[Volume:612;Page:8896] 
BRENT CATCHPOLE (NZ First) 
: 
 I am pleased to rise on behalf of New Zealand First to speak on this bill. Generally New Zealand First is supportive of any initiatives by this Government to improve to protect and to safeguard consumers’ credit contracts and in particular with regard to buy-back schemes. In that regard the Government is to be commended for bringing this to the House at this time. It is timely because we have seen a huge influx of the buy-back schemes that have trapped people into tremendous debt making it virtually impossible for them to get out of those debts. 
Changes to the previous legislation are long overdue and it is timely that we now determine and enshrine in legislation those matters that need updating and improving. I have previously spoken on this bill and have alerted the House to some areas that require further fine-tuning if this bill is to be successful. If it is to be successful complete and robust then these changes will need to be made later on. As Gerry Brownlee mentioned there are one or two other issues—brokerage fees being one—and I will touch on those in a moment. 
Once the new bill becomes law it will be far more difficult for unscrupulous lenders to take advantage of the often desperate bargaining positions of some of their customers by charging fees and interest rates that border on exorbitant. 
The most important part of this bill is Part 3 because this is where the Government has had to act swiftly and take into effect the buy-back schemes. These deals have left families in destitute situations unable to recover their homes. These schemes came about in fairly recent times and they hit with a vengeance. It is very important to protect the unwary from the extraordinary lengths to which some people will go to trap the most vulnerable into a situation that they will have no way of getting out of. These schemes are set up in such a way that the individual borrower transfers his or her property to the moneylender under conditions that make it virtually impossible for that borrower to recover his or her property. 
Simon Power 
: It’s called a mortgage. 
BRENT CATCHPOLE 
: Under real mortgages the interest rates and the conditions are not so oppressive that it is impossible for people to get their property back. These schemes have left people in a situation where they have lost not only their home that they tried to borrow money for but often the homes of relatives who had put up the finances to try to help them out. 
A section in the bill covers independent legal advice. This is a very important part and one that is essential if these people are to get the proper advice and not be trapped into these schemes. However it must be enforced rigorously. One of the concerns during the Committee stage was that the independent legal advice would be recommended by the lender. This is unsatisfactory because obviously if the lender is recommending the legal advice then that legal advice will be leaning towards the lender and not be independent of that lender and it will therefore create a problem for the people borrowing and may even leave them in a situation where they may be entrapped again. 
Clauses 115 and 116 allow for the older Acts that this bill replaces to continue to apply. These clauses allow creditors the choice to elect for the Acts to apply in contracts that were in existence prior to this law coming into force. However it does not allow anywhere for the debtor to have that choice. I am disappointed that debtors are excluded from this option because there are a number of very important issues in this bill on which a debtor would have recourse to a better deal rather than just the creditor having that option. 
Those clauses allow for the creditors to decide whether they want buy-back schemes to remain under those old Acts. If we consider that the buy-back schemes were legal under those old Acts then I am afraid that people who are already trapped in those buy-back schemes will not have recourse under this bill. During the parliamentary Committee stage I asked the Minister to take a call on that to assure the people who are already trapped in these schemes that they would have a safeguard under this bill but sadly that Minister would not take the call to alleviate the fears that people have over the buy-back schemes. 
The Minister’s failing to continue to assure people has meant that they now will be in a position where they have no recourse. In regard to clauses 93 and 96 relating to reopening of credit contracts we were hoping that those clauses would provide the consumer with the means of getting out of some of those contracts. But unfortunately clauses 93 and 96 relate to oppressive contracts. 
Buy-back schemes were legal under the old Acts; even though we considered them to be oppressive they were legal. Therefore if the creditor chooses to continue with those schemes under the old Act unfortunately I fear that people will not have recourse under those particular clauses in relation to the oppressive nature of a contract. That to me is a very sad situation particularly considering that many of those schemes are so oppressive in real terms that if those two clauses give the lender an out then I am afraid the bill will fail and as Gerry Brownlee suggested will have to come back to the House in the new year not just as a short clause but as a full bill to try to rectify those problems. 
In the previous debate on this bill there were suggestions that an education scheme be set up to try to educate people in the better management of their finances and try to avoid the schemes that these contracts are setting up. If this bill is successful then I suggest that it would be a wonderful model to set up an education scheme in schools where people can learn how to avoid the financial difficulties and traps that many people in lower socio-economic situations get themselves into particularly gambling and other means of throwing their money away and not putting it into the correct means of saving and budgeting. If an education scheme were put in place then I think many of the measures that we have had to legislate in this bill would not have needed to be legislated for.