Collins Judith: Credit Contracts and Consumer Finance Bill — In Committee 
Collins Judith: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8716] 
JUDITH COLLINS (NZ National—Clevedon) 
: 
 We in the National Party always like to be positive. In this part we can be positive and that is always such a joy for us. 
Just like the previous speaker from the ACT party Mr Franks I have spent 20-odd years as a lawyer. The Credit Contracts Act was brought into Parliament in 1981 and stood the test of time for 20-odd years. I remember when that Act came into play. Before that we had the Moneylenders Act which was much more cumbersome much more difficult and very easy to offend against—supposedly without any great harm to the person at the receiving end of it. It was great to have the Credit Contracts Act and it is with some sadness that I see that it will be done away with by this legislation. 
Part 3 deals with some of the issues relating to that. In particular I would like to speak about the buy-back transactions in respect of land. I take that matter very seriously and I see that the Minister does too. One of the odd idiosyncrasies of life is that whenever Parliament feels it is taking a step towards stopping some great unfairness methods are brought into play to work around that unfairness and create another one. Unfortunately that has happened in the south Auckland area where my electorate is. A significant number of people there prey on the less fortunate—I see the Minister agreeing and I thank her for that—by coming along with an offer that is just too good to be true. Quite often people have trouble paying their mortgage paying debts or as often happens particularly with Pasifika families there is a funeral overseas and suddenly they need money and someone comes along with this great offer and the offer really is just too good to be true. It is: “I will take away the mortgage for you. I will take away these problems and now you can go back to renting. When you feel better about it all and you’re in a better state of mind and the husband wife or somebody is back working again then you can buy back the house.” 
There are all sorts of problems with that; the Credit Contracts Act does not really deal with them and that is why this part of the bill is one we feel we can support. It applies the credit contract provisions to those buy-back agreements. They almost always involve a situation whereby the person who is selling or entering into the buy-back agreement—the person who originally owned the home—is in a state of distress. Very often those people will never ever be able to buy back that home. Unfortunately the person who helps them to enter into that just-too-good-to-be-true offer knows that and that is one of the problems. I am really pleased that the Minister is supporting me on that issue with her nods. 
Another issue we could look at here is consumer leases and I am just a little bit concerned about that. As I have said before whenever there is a law to protect people people will work out a way to get around it and it has happened here. That will apply to consumer leases of 1 year or more or where there is an option to purchase the goods. 
One thing we believe in and it is in this bill is that there must be good disclosure of the facts. Unfortunately sometimes those facts are not particularly well disclosed and the Credit Contracts Act did a very good job particularly with the finance rate it brought in. Those of us who were lawyers many people in the finance industry and I am sure in the car resale business and many others understood what that finance rate was all about. It was all about putting the true cost of interest into transactions so that people no longer ended up thinking that they were paying 10 percent interest when with application costs and everything else put on they were often paying a true rate of interest in the late 20s or 30 percent area. That is what had been happening but at least under the Credit Contracts Act that issue was addressed. This part will bring those provisions into consumer leases and that is a very good thing.