Young Jonathan: Credit Contracts and Financial Services Law Reform Bill — First ReadingText is incorporated into the Bound VolumeYoung Jonathan: Credit Contracts and Financial Services Law Reform Bill — First Reading[Sitting date: 17 September 2013. Volume:693;Page:13408. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (National—New Plymouth): I am pleased to stand in support of the Credit Contracts and Financial Services Law Reform Bill in its first reading. It is sponsored by the Minister of Commerce Craig Foss. The package of reforms that we are looking at in this bill was shaped by the Financial Summit which was hosted on 11 August 2011 in Auckland and chaired by Sir John Anderson. That summit brought together 250 people from community groups budgeting services NGOs banks financial regulators and credit providers. They looked at ways of tackling particularly irresponsible lending that was particularly offensive and was affecting people in our economy and in our communities. The financial summitparticipants called for legislation to require responsible lending and for greater penalties for lenders that are not registered on the Financial Service Providers Register which is under the Companies Office. Then in April 2013 Minister Foss introduced this bill to the House and here we are at today’s reading of it the first reading.The consumer credit and financial services law reform dovetails into the Consumer Law Reform Bill which the Commerce Committee spent considerable time working on and adds to that suite of reforms and changes. Indeed the Commerce Committee looked not just at the Consumer Law Reform Bill but right across the scope of financial bills and security bills. This bill contributes to that overall package and the changes introduced in this bill represent a comprehensive crackdown on particularly unscrupulous lenders that prey on desperate people and leave them and their families trapped in that spiral of debt that the previous speaker Carol Beaumont was talking about.National wants to have more informed borrowers and more responsible lenders. It is important that we approach this problem from both sides. Responsible lending is absolutely essential if people are going to have the confidence to use credit and the vast majority of people do use credit. They need to have that confidence that there is responsible lending taking place. I read some time ago that Professor David Mayes who is a professor of banking and financial institutions at the Auckland University business school said that New Zealanders are average. He called us average when it comes to financial literacy and said that this is not a problem unique to our country but it is a problem that we need to address. Financial literacy is an ongoing need for New Zealand because when people are financially literate then they can then have good judgment about borrowing and whom to or whom not to borrow from.Financial literacy is defined as the ability to make informed judgments and make effective decisions regarding the use and management of money. But we always know that there are people who are not financially literate and that is where some people can take advantage of them through unscrupulous lending. So we cannot just put it out there that the country needs financial literacy; it needs responsible lending as well. That is the other side of the equation. Some lenders have irresponsible lending practices and some consumers make poor decisions. So it is important that this bill contributes to the addressing of this issue of vulnerability and the taking advantage of that vulnerability which some people have done in the past.Under this bill lenders must act responsibly. Consumers must have the information they need to make informed decisions and there are serious consequences for those who breach the law. So this legislation is a major overhaul of consumer law and I am pleased that the opposite party the Labour Party will be supporting its referral to the select committee. I am sure that we will go through this very very well with a fine-tooth comb in that committee to ensure that the consumer of course benefits from this legislation. The proposals in the bill complement reforms being progressed under the Financial Markets Conduct Act which recently passed through this House. It was also a bill that was undertaken and reviewed by the committee.This bill is also part of the Government’s Business Growth Agenda and will contribute to aligning business law between New Zealand and Australia. Many of the changes are based on equivalent provisions in the Australian National Credit Code. It is fair to say that this bill has already received wide consultation in the sector and no doubt during the select committee stage we will continue to receive that consultation. There is much to be said about this bill and I believe that as we go through this process in the select committee and back into the House we will see a very strong and robust law being put into place that will be as I said before of benefit to consumers in New Zealand as a whole. Thank you.