Goldsmith PaulHon PAUL GOLDSMITH (National): Thank you Madam Deputy Speaker. It is my pleasure to speak on this bill which the National Party will support to select committee in order to have a full discussion and inquiry about elements of this legislation. I think everybody can understand the impetus for it. We've had actually a number of bills in this House over recent years trying to deal with the issue of particularly truck shops and the opportunities that are there for people to be exploited through credit contract arrangements and to end up paying colossal sums for items and basically paying a lot of money for short-term borrowing in particular which has grown out of control—very high interest rates and high fees so that a cycle of debt is got into and the difficulties of vulnerable New Zealanders are added to considerably.Everybody understands the issue and the concern. The question is: what is the best remedy and whether the remedy might actually end up causing more problems than it solves—that's the real trick. What we can see here and some of the elements in this bill seem to make sense in terms of applying a fit and proper person test to directors and executives who are working in this kind of field in order to make sure that those people are people of good character—and that makes sense. What we're a little bit more concerned about though is some of the expectations of lenders that are listed in this bill.In one area the bill is suggesting that it strengthens the principle that lenders must make reasonable inquiries before entering into an agreement with the borrower so as to be satisfied that the credit will meet the borrower's requirements. We've already brought in legislation to do that—to ask them to make reasonable inquiries—and now we're lifting the barrier higher. So that question of what is a reasonable inquiry—how far do you have to go into somebody's private life and into their circumstances and how much they are earning and how much they are spending whether they've got Sky or Netflix or whether they're smoking or whether they're doing this that and the other thing in order to get a realistic assumption about whether or not they can afford to do this—there is a limit to how far you can go on that before people don't lend the money.The reality that we have to face when we're dealing with this legislation is that you're dealing with the realities of life where some people need access to cash particularly short term. They need to borrow $500 for something and it may only be a month that they need it for until they get some money from somewhere else. So they're going to get the money from somewhere and the concern that we have is that if you make it impractical for a regulated part of the economy to provide that money then the alternatives are worse and that could be the outcome.The area that is of particular concern is that the legislation removes the current rule in section 9C(7) that the lender may rely on information provided by the borrower. So maybe I should just make that plain for everybody. What we're saying here in this bill is that if somebody comes to you and says I want to borrow $50 or $5000. This is my income and these are my expenses."—if they lie through their teeth about those two things the person that lends them the money is somehow still at fault because you can no longer rely on what people say.Now that is quite a dramatic thing to be introducing into the law. It is a very substantial step. There is a real prospect that given that people will just say "Well we're not going to lend to that particular group." If the consequence of that is that you move people from the regulated area of borrowing into the unregulated area—because the regulated people can't do it because they can no longer rely on what is being said—then the outcome might actually be worse.That's not an excuse for doing nothing but that is something that we definitely want to tease out in the select committee process. In these complicated areas of financial market reform and regulation there is always a very high chance that any legislation or regulation Government brings in achieves the exact opposite of what it sets out to achieve over time because the marketplace is much more complicated than regulators and politicians give it credit for. So we have to be very careful about how we go about it.On that basis we will support it to the select committee to have that discussion but we do have some serious concerns. Thank you very much."