Franks Stephen: Credit Contracts and Consumer Finance Bill — In Committee 
Franks Stephen: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8712] 
STEPHEN FRANKS (ACT NZ) 
: 
 I am driven to comment on this legislation purely for the sake of placing a mark in the ground. Some law changes are made out of a strong sense of commitment and ideology that in hindsight look absolutely stupid. Some are made out of simple stupidity. There has to be something absolutely stupid to be following an Australian precedent into Australian-style cost levels into generating Australian-style levels of income for lawyers. They come from something that is supposed to be to the advantage of consumers; a subpart called “Changes on grounds of unforeseen hardship”. 
In this Credit Contracts and Consumer Finance Bill this flagship reform that some utterly stupid Ministers are putting through we have provisions that state that if a debtor experiences the end of a relationship or an illness or injury or loss of employment then he or she may apply to the lender to get a change in the terms of the deal. Of course they can. However this Government thinks there are free lunches everywhere and Father Christmas exists so do fairies at the bottom of the garden. The Government thinks that a lender can be exposed to the risk of having a scumbag debtor fend off enforcement and fend off the collection of the debt by going along to the court and saying: “I’m in hardship. My marriage has broken up. I shouldn’t have to pay this back.” 
Of course people can do that but someone bears the cost. Every debtor bears the cost. It is built into the interest rate into the charges into the documentation fee and into the credit assessment. What does it do for a start to people who are in a relationship? It makes them slightly less desirable than those who are not. What does it do to the provisions in the agreement about meeting costs on enforcement? It means there is more enforcement cost to be spread across all those decent folk who want to borrow money and who are not in the category that causes this risk. 
We are looking at a bill that deals with a non-problem. Have any of us been besieged by legitimate concerns about the existing Credit Contracts Act? 
Hon member 
: Not one! 
STEPHEN FRANKS 
: Not one! I spent 22 years as a commercial lawyer and I think I would have seen one or two in all that time where I thought the creditor had been a bit harsh. Indeed they leaned over backwards. After this they will stand on their rights and of course they will do all the back-covering steps. They will send all the letters at the expense of borrowers. There is nothing free. There will be a whole category of borrowers who simply cannot get finance because they will be priced out or they will look too risky. Why would people lend to someone who is sick if later on that person could say that because of the illness he or she does not have to repay on time or that the interest rate is too high? Why would they lend to someone in a wheelchair if that person could then say that injury is a problem? Why would they lend to someone who is in a threatened level of employment if they had a choice knowing that the person could come along and hold up the enforcement of the debt? 
 This provision is typical ignorant socialism. This is the kind of stupidity that a giggling Minister of Commerce—also a Minister of Immigration who cannot run that portfolio—shows when she is trashing a perfectly sound Credit Contracts Act. The Minister is giggling because she has no answer. She will not take a call she will not speak and she will not answer the arguments. She has no evidence that this bill will do a thing. Why did every creditor—the good ones and the bad ones—oppose this bill? This Minister will go down in history as one of the most stupid Ministers not just doctrinaire not just ideological but simply stupid. 
This stupid Government has caused enough grief for ideological reasons. It has the Resource Management Act. It has the Employment Relations Act. It has enough anti-business yet it comes in with this bill and starts stuffing up the loan market for consumers. It was said during the introduction of the bill that there has been a huge expansion in access to credit. Does that say there is a problem? Does that say the market needs this intervention?