Collins Judith: Credit Contracts and Consumer Finance Bill — In Committee 
Collins Judith: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8729] 
JUDITH COLLINS (NZ National—Clevedon) 
: 
 Part 5 like many parts of this bill has some very laudable provisions and some laudable purposes but again we come to the reality of the situation. 
Clause 92 “Meaning of oppressive” states that oppressive “means oppressive harsh unjustly burdensome unconscionable or in breach of reasonable standards of commercial practice.” That is pretty much the same as in the 1981 Act. The fact remains that although that Act has been in place now for over 20 years there have been very very few provisions in contracts such that a court has held that the actions of the lender or the creditor have been oppressive. The reality is that as I have said before tonight and I will continue to say these sorts of provisions should be in place for the little people of the world the people who are most vulnerable when it comes to contracts but those very same people are those least likely to take these matters to court least likely ever to be able to afford to take these matters to court and least likely ever to be able to try to prove that something is oppressive or that a contract should be reopened. 
When the Credit Contracts Act first came into play there was a lot of concern expressed by lenders as there will be under this legislation as to the stand-down period in credit contracts—the period when people could reopen the credit contract or decide they did not want to go ahead with the financing. There was a great deal of concern as I recall among the banks that contracts might be overturned and for a little while they thought everyone would have to draw down their loans about 3 days before the settlement of a house purchase just in case the court were to decide that something was oppressive or unfair. There was all this uncertainty and I note that my colleague Mr Richard Worth who was also a lawyer by profession before coming into Parliament— 
Clayton Cosgrove 
: A bush lawyer. 
JUDITH COLLINS 
: No a very very good lawyer. The fact is the banks were very concerned that they were going to end up on the wrong side of the law and they said that that would have to happen. It took a couple of weeks as I recall for them to work out that one cannot do business like that. One cannot do business on the basis that something might go wrong. 
It concerns me and it concerns the National Party that no matter what we do with a bill like this we will constantly be encouraging an increase in compliance costs to the point of over-compliance of lenders/creditors taking extra care. Those costs will always be added on to the borrowers. The fact is that in any of these transactions any cost is always a cost to the borrower. It is a cost to the borrower by way of either a lending fee or a borrowing fee or it is a cost to the borrower by way of an interest rate. The fact is that the costs of the creditor of the financier are and must be added to those of the borrower. 
The reality is that as much as we try to help the little people of the world who are borrowing under these agreements all the people out there who need to go ahead and do business we will simply make it harder. We will make it harder for them firstly to get loans and secondly to pay them. That is the problem. Nobody is actually forcing people to take loans—unless one counts the Hon George Hawkins who is introducing Internet gambling through the State. All that will happen is that we will be making it harder for people to get loans to go about their business harder for them to get loans to buy cars and harder for them to get loans to buy houses and we are putting on to them extra costs. That is one of the tragedies of it. We are rushing around trying to be kind but we could have a programme of letting people know through schools television and radio what these issues are. If we want to stop buy-back schemes we should be educating people and we should be letting them know about the problems they will encounter.