12. Financial Systems—Peer-to-peer LendingDAVID SEYMOUR (Leader—ACT) to the Minister of Commerce and Consumer AffairsFinancial Systems—Peer-to-peer Lending12. DAVID SEYMOUR (Leader—ACT) to the Minister of Commerce and Consumer Affairs: Has he received any advice regarding regulatory uncertainty around peer-to-peer platforms and the Credit Contracts and Consumer Finance Amendment Act 2014?Hon PAUL GOLDSMITH (Minister of Commerce and Consumer Affairs): Yes.David Seymour: Does the Minister support the Financial Markets Authority's (FMA's) interpretation that peer-to-peer lending platforms such as Harmoney provide an intermediary service and are not a creditor?Hon PAUL GOLDSMITH: Look I would just say at the outset that the member will be aware that the Commerce Commission had civil proceedings to clarify whether one peer-to-peer lender platform fee constitutes a credit fee under the Credit Contracts and Consumer Finance Act and so I do not want to go into the specific details of that. In terms of the broader question—yes I have had advice from the Ministry of Business Innovation and Employment (MBIE) the FMA and the Commerce Commission and I am considering them all as to whether the overall settings are right. I will be working with officials and considering that carefully over the next few weeks.David Seymour: Why does the Minister think that MBIE and the Commerce Commission are concerned about a practice that is the norm for peer-to-peer platforms in the US the UK and Australia with for example in the UK Zopa with £1.6 billion of loans and Funding Circle with £1.4 billion of loans and Lending Club in the US with US$27 billion of loans—all of which charge borrowers origination fees which are the subject of the Commerce Commission's investigation?Hon PAUL GOLDSMITH: It is because I think the laws relating to credit contracts are slightly different in New Zealand and we have to deal with the situation that we have in this country and make sure that the laws work effectively. We do certainly want to see peer-to-peer lending work effectively in New Zealand and I am carefully considering the options to make sure that that works in practice. David Seymour: How is New Zealand really different from the UK the US and Australia and is this a case of New Zealand companies falling behind because of poor slow and not fit for purpose regulation killing entrepreneurship in our financial technology sector?Hon PAUL GOLDSMITH: I think the member could reflect on some of the ease of doing business in terms of regulation in this country where we score very highly. The member and his caucus may prefer no regulations but we have seen throughout the history of the financial markets in New Zealand and globally that they can create problems and we are working through this carefully and sensibly.David Seymour: I raise a point of order Mr Speaker. The Minister did not actually address the question about this particular area of regulating peer-to-peer lending at all; he merely referred to peripheral issues. Mr SPEAKER: The difficulty was that it was not a very clear question the way it was asked—How is New Zealand different from the UK US and Australia?". It was a difficult question and I think on this occasion the Minister addressed it.David Seymour: Does the Minister find it odd that his Government spends so much time trying to pump up economic diversification and as soon as the private sector gives us some diversification his regulatory regime kills it—as it is doing at Harmoney in Parnell with 45 employees right now?Hon PAUL GOLDSMITH: I do agree with the member that the regulatory framework for peer-to-peer lending does need to be clear and we do want to support innovation and competition in credit markets. That is why we are giving this very careful consideration.David Seymour: In light of that will he consider clarifying the law by making a small amendment to the Credit Contracts and Consumer Finance Amendment Act or will he let this overzealous regulator harm nascent financial technology in New Zealand?Hon PAUL GOLDSMITH: I am not sure whether the member is implying that as a Minister I should be interfering with the independent regulator in terms of the Commerce Commission which I certainly would not want to be doing. But we are giving thought to the broader policy issues. Iain Lees-Galloway: How much did those questions cost David?David Seymour: I raise a point of order Mr Speaker. It is a robust debate but for Iain Lees-Galloway to imply that those questions were paid for by somebody outside the House is completely out of order. It brings disrepute to the House and he should stand withdraw and apologise.Mr SPEAKER: Order! I heard the comment. I did not actually identify who said it. Now that the person has been identified I do require him to stand withdraw and apologise.Iain Lees-Galloway: I withdraw and apologise."