Goudie Sandra: Credit Contracts and Consumer Finance Bill — In Committee 
Goudie Sandra: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8717] 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 I would like to follow up on the words from my esteemed colleague Judith Collins and say that it is good to see that the finance rate has been included. A lot of submitters were incredibly concerned that it had been omitted and I remember a deliberation in the House in which Paul Adams from United Future applauded the fact that it had not been included. It is quite interesting to see that the finance rate is now there and I applaud the Minister for recognising that it is an important aspect of the bill. 
One of the other things I would like to talk about is that the disclosure requirements for lease arrangements are to a degree the same as those in schedule 2 for consumer credit contracts. Again the disclosure requirements are important. One submitter said that one of the starkest ways to bring home to consumers the meaning of a credit contract or credit lease or whatever would be to have nothing on the first page of the contract other than the total sum payable—in large black letters. Members heard my esteemed colleague Judith Collins explain the difficulties that people can get themselves into. Any reasonable person—and we certainly have some concern about the definition of that because there is not one—can get himself or herself into difficulty. If the total sum payable is printed in large black letters on a blank page then that gives people a very clear message about what they are getting themselves into. A number of people out there do not have the knowledge or indeed the literacy or numeracy skills to fully appreciate what sort of transaction they are entering into. It is a major concern. 
No research has ever been provided to show why this bill is necessary and why it has been necessary to legislate to the degree attempted in order to protect people from themselves. Nothing has been provided in the way of research to show that a new bill or Act is justified and that issue has been raised by a number of submitters this evening. It is a material omission that the bill is not based on sound research but on someone’s concern that consumers were not being protected enough and who wanted to strengthen the protection provisions through this newly named Credit Contracts and Consumer Finance Bill. 
I would like to raise the issue of compliance costs yet again because it is a significant part of what is happening with regard to this bill. I did not cover all the business compliance cost statements that were identified in the preamble to one of the original bills but as Stephen Franks has already said those costs will be passed down to consumers. Dealing with claims by consumers will be a cost but at the moment there is no way of knowing to what degree that will impact on businesses. The “oppressive” provisions will place a cost on both consumers and lenders but no one has any way of calculating it. It is one of the risks imposed by the bill and it could be incredibly substantial. 
There will be a cost to lenders in monitoring the compliance of their programmes with the law and due to stronger enforcement that could again be substantial—a fact that has been noted by a number of submitters. There is real concern about increased costs because of unknown factors in relation to what is “oppressive” and what that will mean in terms of litigation. There are significant opportunities for people who are not satisfied with the contracts they have entered into to bring about litigation by saying that they were misled. It could be as simple as them saying that they are reasonable people and that they were misled when they entered into the contract. We will get into that issue further as we debate the other clauses of the bill. 
Hire purchase providers have also identified increased short-term costs but I put it to the Committee that those costs will be ongoing.