Lotu-Iiga Sam: Credit Contracts and Financial Services Law Reform Bill — First ReadingText is incorporated into the Bound VolumeLotu-Iiga Sam: Credit Contracts and Financial Services Law Reform Bill — First Reading[Sitting date: 17 September 2013. Volume:693;Page:13420. Text is incorporated into the Bound Volume.]Peseta SAM LOTU-IIGA (National—Maungakiekie): Tonight we have brought to this House two bills that help vulnerable families—our families. We have brought in two bills to protect children against abusive adults and I thank the Minister for Social Department Paula Bennett for bringing in that bill the Vulnerable Children Bill. We brought in another bill to protect borrowers from predatory lenders and I thank the Minister of Commerce Craig Foss for bringing this particular bill the Credit Contracts and Financial Services Law Reform Bill to the House. These two bills demonstrate again that this Government cares for the poor the downtrodden and the vulnerable. In tough economic times when people have to work extra hard to pay their bills put food on the table and—as the last speaker Jan Logie has just stated—provide for their families it is unacceptable that they be taken advantage of by loan sharks.A family borrows a thousand dollars but cannot pay it back and the lender knows that they can take anything in that house to repay the loan—toys beds cultural items such as fine mats and even things that do not belong to them. When a young auntie is the guarantor of a car loan but no one explains to her that she may have to pay back this loan if her nephew does not meet those payments she can pay up to double the price of the car loan. When a man buys a TV on credit the contract includes lots of fees and insurance but he does not know what all these costs are about. These are the types of examples that I have witnessed in my electorate office in Maungakiekie in Onehunga. These are some of the common problems as has been identified in the Ministry of Consumer Affairs campaign launch last year that looked at vulnerable communities. We have addressed some of the issues around families who need to work within their means and their budgets. Minister Paula Bennett increased the budget for budgeting services up to just under $11 million and it was a paltry $4 million under the Labour Government.When this National Government came into power we set about to promote investor confidence in the financial sector which had been rocked by finance company failures and we moved quickly to arrest some of those issues that arose within the securities industry that we all know about. The Financial Markets Conduct Bill was passed 2 months ago. The financial service providers legislation and financial advisers legislation went through this House and did get support across this House and that was initiated by this National Government. It also follows on from my Moneylenders (Licensing and Regulation) Bill which I introduced in 2011. That bill addressed the licensing regime around some of these lenders repossession agents and forms of security. It looked at the behaviour of lenders as well as penalties for their behaviour. I am happy and I am proud that this bill takes some of the measures that I worked hard to deal with in my member’s bill.But that bill was also in response to a number of people whom I had talked to—budgeting agencies NGOs that worked with vulnerable borrowers—and the work that they had done. We also had the Financial Summit in 2011 where we brought together over 250 people from community groups—and some of those were budgeting agencies—but also banks financial regulators and credit companies. That was the genesis of this bill coming into the House. Last year the Hon Simon Bridges went through a draft bill that we consulted on across our communities across New Zealand. This bill took on board some of the recommendations of the Law Commission around repossession—58 recommendations that were made in total.This is a multi-pronged approach towards promoting responsible lending by increasing consumer protections and requiring that lenders give borrowers more information and that they also look at their total circumstances. It is not just about the income that that borrower is able to generate; it is about their total circumstances andtheir ability to repay those loans. It is right and proper that this bill addresses a borrower’s financial circumstances and requires that lenders look at them and at whether they can be reasonably expected to repay without causing significant hardship. It is about responsible lending and it means lenders have a duty to look out for their customers.Many lenders are responsible. In our discussions across this country talking to banks second-tier and third-tier lenders they are responsible and this bill does not target those lenders. It really is about targeting those we call loan sharks those who prey on the vulnerable those who prey on the poor and those who prey on those who are unable to repay their loans. We have incorporated both pieces of legislation around consumer credit contracts but also the Credit (Repossession) Act and this is what this bill incorporates as part of its mandate.The principles in this bill will be complemented by what many have already described tonight as a Responsible Lending Code. The code will go out and seek industry best practice and consultation. Lenders and interested consumer groups will be consulted in the development of that code. I think in bringing that together I believe we will have a workable and certainly a functional piece of legislation of which we can be proud. The policy objective really is around ensuring that creditors lend to consumers who can manage their consumer credit contracts responsibly. It provides protection for vulnerable consumers including protection from those unscrupulous lenders we have all talked about tonight. This bill is to be commended. It is a bill that we can certainly welcome and we seek not just the support of New Zealanders which we know we have but also the support of parties across this Chamber. Thank you.