Consumer Guarantees (Removal of Unrelated Party Lender Responsibility) Amendment Bill

I move, That the Consumer Guarantees (Removal of Unrelated Party Lender Responsibility) Amendment Bill be now read a first time. I nominate the Commerce Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 31 January 2017. This bill looks to improve consumer protections and reduce consumer costs. The Consumer Guarantees Act 1993 is a cornerstone piece of legislation protecting consumers. While the Fair Trading Act provides pre-sale protection, for example against misleading advertising, the Consumer Guarantees Act, herein referred to as the CGA, provides post-sale protection by requiring suppliers to remedy any defect in goods or services provided. Over the years, the Act has been updated to take into account changing consumer needs and to make important clarifications.

This bill looks to make a clarification that is small but that stakeholders tell us is important. Specifically, this bill seeks to clarify when lenders should be liable under the Consumer Guarantees Act and when they should not. As will be shown, the existing legislation is ambiguous and the solution that this bill proposes is the concept of related-party connectedness. If the trader and the lender are not connected, then the lender should not be liable under the Consumer Guarantees Act. The reverse should also hold. If the trader and lender are connected, then the lender should be liable under the Consumer Guarantees Act. The trader, of course, is always liable.

In the first scenario, lenders who have no connectedness to traders are at a distance from the relevant transaction and should not reasonably be expected to be liable under the Consumer Guarantees Act. As we will show, international precedents in Australia and the United Kingdom strongly support this concept in their consumer protection legislation. In the second scenario, we are very concerned about traders and lenders who do have connectedness, and believe that the lender should definitely be liable for Consumer Guarantees Act remedies. This will be referred to as one and the same trader-lenders. It is simply not good enough for a trader who has both sold a faulty domestic item and been the loan financer to pass off their responsibilities for remedy to their reneging lending arm when they are both, effectively, one and the same. This bill will bind that lender to the Consumer Guarantees Act.

The legislative ambiguity arises from the definition of “suppliers” in the Consumer Guarantees Act 1993 and the attempt to connect traders and lenders with the word “arranged”. The full legislation reads under the definition of “supplier” in section 2(1)(b)(ii) that a supplier is “a creditor within the meaning of the Credit Contracts and Consumer Finance Act 2003 who has lent money on the security of goods supplied to a consumer, if the whole or part of the price of the goods is to be paid out of the proceeds of the loan and if the loan was arranged by a person who, in trade, supplied the goods:”—arranged by a person who, in trade, supplied the goods. In simple terms, if a trader arranges a loan with a lender, then they are both suppliers and both liable under the Consumer Guarantees Act.

It is ambiguity in the wording “arranged” that is leading to uncertainty and differing practices in the New Zealand market place, not all of which benefit the consumer; some of these practices do. Contest that connectedness between a trader and a lender by saying the trader did not arrange the loan but merely made an introduction, and the lender walks away. In Sudfeldt v UDC Finance Ltd and others, the court interpreted their interactions as an “introduction” and the lender was, therefore, potentially not liable to Consumer Guarantees Act remedies. Another common practice is to utilise the available option in legislation for the lender to seek indemnification from the trader for any Consumer Guarantees Act recourse. This is routinely done as back-to-back indemnities, with an administrative cost that is borne by the consumer, and, again, the lender walks away.

The problem here is that the word “arranged” is a functional activity that offers no comment on structural relationships where the trader and lender may be related as joint ventures, cross-shareholdings, or otherwise connected. International legislation, especially in Australia, is very prescriptive on how structural relationships connect traders and lenders, and should be taken into account. Various terms and detailed descriptions are used to describe the trader-lender relationship, including “tied”, “linked”, and “connected”. For the purposes of this reading, I am describing the trader-lender relationship as connectedness. Connectedness then is clearly important, and a deeper dive into international definitions is informative.

The influential UK Crowther report talked in terms of “connected loans” and “connected lenders” and made the following statement around joint liability: “There are compelling reasons for distinguishing connected from unconnected loans. The connected lender and the seller, where not the same person, are, in effect, engaged in a joint venture to their mutual advantage and their respective roles cannot be treated in isolation.” The committee of the Law Council of Australia similarly recorded that a lender with a tied loan organised by a trader has connectedness and should have liability to a consumer as follows: a financier who has made a tied loan to a consumer would, to a limited extent, be obliged to underwrite the liabilities of a supplier to the consumer in respect of the consumer credit sale. These examples describe international legislation where traders and lenders should be connected and lenders made liable. There are also clear international precedents for when traders and lenders should not be connected and should not be liable, and the report from the Law Council of Australia and the UK Crowther report talk to both of these.

The specific reference in these two examples is to a loan as the credit instrument. This lends itself here to a comment on the deliberately narrow scope of this bill, which I will state here as applying only to goods and not services. The Consumer Guarantees Act covers goods: for example, personal and domestic goods, goods where the goods are acquired on credit and where there is a secured creditor, and goods purchased with personal loans as the credit instrument. Other credit tools, especially those most frequently used—namely, hire purchase agreements—have a different complexity of connectedness associated with who owns the goods. They are covered by several different Acts and are not in scope for this bill. This bill also has little impact on traders who go out of business, as this bill is addressing a different issue.

I have made the case that connectedness between traders and lenders is an important concept that is ambiguous in our legislation. In the UK, in respect of trader-lender connectedness, the Crowther report used the term “connected lender” and defined this as “one who, pursuant to a regular business relationship with one or more sellers, makes a loan which is used to buy goods or services from one such seller”. The Law Council of Australia report was much more specific on connectedness and stated: “Where a supplier has the required commercial link with a financer he is termed a ‘linked supplier’. This includes the supplier having a trade agreement with the financer, referring customers to the financer, and having blank finance application forms on the premises.” Clearly then, the Australian definition is much more prescriptive. For our purpose, this bill looks to define connectedness using existing New Zealand tools such as the New Zealand Equivalent to International Accounting Standard 24, which defines “related parties”.

Finally, we turn to consumer and industry implications for progressing this bill. Firstly, consumer protections are increased by adding clarity and robustness to legislation that makes lenders liable to the Consumer Guarantees Act. Secondly, consumer customer service is improved by providing clarity around lenders who are not bound to Consumer Guarantees Act remedies. This benefit occurs by requiring traders to provide better customer service if they know they cannot by default refer to the deep-pocket safety net of lenders. Thirdly, unconnected lenders, freed of the risk of liability under the CGA, will be more willing to lend to consumers, making consumer credit more widely available. Finally, customer costs are reduced because lenders who are unconnected and no longer liable to Consumer Guarantees Act remedies will no longer need to adopt back-to-back indemnification against the trader as a default practice, and the administrative costs will not be created and passed on to the consumer.

In conclusion, this bill looks to strengthen consumer protections and standardise industry practice by removing legislative ambiguity in the word “arranged”, which currently connects traders and lenders. A framework is proposed that is more consistent with international best practice. I very much welcome the wisdom and dialogue of others from across the House and, without presumption, guidance from the select committee. It is with pleasure, then, that I introduce the first reading of this bill to the House.

Well, for those people watching this debate who are not commercial lawyers or accountants, let me just start by saying that I have a lot of respect for that member, Dr Shane Reti, and the work and the argument that he puts up. But part of the role of this House, and certainly of the Opposition, is to scrutinise bills, particularly members’ bills, and to look at them as to whether they will enhance or in some way assist in making New Zealand a better place. This is a bill that I just get the sense is a solution looking for a problem. I really cannot find any real problem out there that people have identified that means that the House’s time should be taken up with this change in this bill.

What I have found when I looked at the amendment to the Consumer Guarantees Act that has been suggested by the New Zealand Initiative—this is on page 16 and is one of the things that it has put forward. It seems to me that it is more about trying to, in a sense, limit consumers’ rights and enhance the rights of lenders, and particularly finance companies, rather than do what I believe is the right thing to do, which is to stand up and look after consumers. So I have a problem here.

I suggest that perhaps what this member has been given is one of those bills where, when you come into Parliament, somebody says: “Here’s a member’s bill. Put it in the ballot.” Unfortunately for Dr Shane Reti, it got drawn out, and then he has got to get passionate about it and lie awake at night and worry about it, when in fact it does not seem to me to be something that you need to be worried about at all.

Look, the guts of this bill is really that if I go out and buy a good, and I need finance, and I arrange for finance through the seller of that good, they are linked together—the person who is the lender, if you like, and the seller. Shane Reti’s bill does not, as I understand it, change that relationship. But if the lender is a different organisation that is out there, and I have a problem with that good—I buy a good from Dick Smith Electronics, for example, and I have a problem with it—I can go back to Dick Smith Electronics, like anybody can, but I also, at the moment, can go to the financial organisation that arranged my finance, and that finance organisation has some accountability in terms of the money that it lent to me in respect of that good. Dr Reti wants to take away that degree of compliance and accountability—take that away.

So as a consumer, am I better off or worse off? I am actually worse off, because I have less ability to seek redress for a faulty good. If a company, for example, goes under and the good is still faulty, I am left still paying the finance company for that good that is no longer of any use to me. So, suddenly, I am in a very difficult position. I have a good that is useless. I have a manufacturer or a seller that cannot give me any redress, my finance company is demanding that I still continue to pay the bill, and that finance company is let completely off the hook. That is how I see this bill, in words of one syllable or less, rather than the account that we have just heard from Dr Reti.

So for that reason—and I am willing to be proven otherwise—I believe it is something that is (1) not really a problem; (2) ideologically driven; and (3) I do not think that it lives up to protecting the consumer, as Dr Reti says, in terms of the change that is necessary. It actually advantages finance companies to the disadvantage of consumers, and it is taking away some of the rights that consumers have at the moment. There may be a little bit of confusion in and around those definitions between lender and trader, etc., but that is not insurmountable. But what we are doing with this bill is taking away some of those rights that consumers have. I believe that that is wrong.

Secondly, it also does a couple of other things. I think it introduces a degree of vagueness. Let me give you, perhaps, another example. Car dealerships often have their own financing. I am unsure about how a franchise relationship would affect the mix, so if I buy a car from a Hyundai franchise, using Hyundai finance, this may not be a related-party transaction. In other words, although it seems to be related in terms of the car that I am buying and the organisation that is there, the franchising makes that rather vague. So, actually, rather than introducing greater clarity, as Dr Reti is suggesting, it introduces a greater degree of confusion.

There is a third reason why I think we should oppose this bill, and that is what is often referred to as the “Henry VIII” clause; that is, bringing through Parliament issues that should be resolved in Parliament by statute rather than by regulation. The definitions that Dr Reti is using within the accountancy bill here, which are from International Accounting Standard 24, mean that the definition is not explicit in this bill, but, in other words, is being brought in by another means. It is not good form and it is not good practice, and that is why it is called the “Henry VIII” clause, because Henry VIII changed things according to what he wanted to do, rather than actually taking them through the proper process.

But I come back to the main point that I made at the beginning: this is a bill that will disadvantage and take away some of the protections that consumers currently enjoy when they buy goods, the goods turn out to be faulty, and they take them back. If the trader or the manufacturer is incapable, for whatever reason, of being able to give the consumer satisfaction in terms of a replacement or a repayment or whatever, the consumer at the current time has the ability to go to that finance company that financed that good—if in fact that was what the consumer did, get financing—and if that financing company is disassociated from the seller, is not linked to the seller at all, then that finance company has, at the current time, a responsibility to give some redress to the consumer. Under Dr Reti’s new bill that link will be cut.

I actually believe that if you are a finance company or you are lending money to a consumer, there is a right of doing due diligence and looking at the ability of the borrower to pay and looking at what that borrower is wanting to buy with the money that you are lending. I actually think that that is good practice. What we are doing here is letting the finance company completely off the hook. I believe that that is not good practice. It is not advancing consumer guarantees and consumer protections, which, as Dr Reti says, this bill purports to do. In fact, it takes some of them away.

It is for that reason—I am sure that the bill will pass, because I am sure that he will have the numbers in the House—that we are not supporting this bill. I say this because I have looked at it quite closely and, as I say, I respect the word of the member there, but I just do not think that this bill stacks up in terms of giving consumers better safety protection.

It is a pleasure to rise in the first reading of Dr Shane Reti’s member’s bill. Just to comment to the member who has just sat down, David Shearer, I have to actually commend the member Dr Shane Reti. He is a conscientious member. When his bill was drawn from the ballot, he actually came around to my office with the bill and the explanatory note, all ready for us to go to debate this bill, because he was sending it to the Commerce Committee and he wanted to brief me. As David Shearer, who is the member for Mt Albert, has said, he has tremendous respect for Dr Shane Reti.

I have tremendous respect, too, for David Shearer. He has had a worldly experience, but I am slightly confused as to how he thinks that a bank that lends customers money to buy certain consumer goods can be jointly liable with the seller of the good. What he is actually, literally, saying is that if banks loaned money to people who purchased homes in Christchurch, which was devastated by earthquakes, and those people have earthquake damage, then those banks are liable for the damage as well. I think that is what he is saying. I am a little bit confused by his analogy as to how a third party who is the lender of the money to consumers can be jointly liable for something that goes wrong.

You may not understand, but some of us girls have to get shavers for our hairy legs as well. Recently, I had the experience of purchasing an epilator that did not actually work. I had to go back to the shop to return the good and say that it did not work. If I had, in fact, borrowed money to purchase that epilator, and it was not just the shop that sold me a bung epilator that was liable but also the bank that loaned me the money to purchase that epilator was jointly liable—that just does not make sense. This bill is about separating the supplier of the good and the financier—the lender of the money—because they are the unrelated third party who should not be liable.

💬 Jami-Lee Ross: You can tell that Shane Reti wrote this speech.

Ha, ha! He is listening. I am not so sure he is actually liking the examples. I do not know why I actually said that.

The aim of the bill is to amend the Consumer Guarantees Act 1993 by changing the definition of “supplier” in the Act to exclude the lender who is an unrelated party. As Dr Shane Reti said, if they happen to be related—for example, if I am purchasing something from, let us say, David Shearer, and I think he actually mentioned Hyundai, and he happened to be also a financier in that company, maybe as “David Shearer Finance” or something, and he is the seller of that good as well as the financier, then he should be liable. Both of those companies should be liable because he is, effectively, that one person who is selling as well as financing. In that sense, we are joining in one and separating in another. What we are actually saying is that when they are unrelated parties, they should not be liable, but if they are joint and relatable parties then they should be liable. I think I got that, Shane?

I am looking forward to the submissions process in the select committee, and I am hoping that lots of people will submit on the bill.

National believes in well-informed borrowing practices and good consumer law and smart lending policy. This bill will, in fact, clarify the Consumer Guarantees Act by making an amendment and updating the responsibilities of traders and lenders. I think Dr Shane Reti has done himself proud with this little bill, and I think he has actually been very proactive in meeting with members to explain what the bill is. It is a real shame that he did not have a catch-up with David Shearer, because, obviously, he never got the message. I think it is a little wee ripper of a bill, and I look forward to hearing the submissions in the select committee. I commend the bill.

Well, I am actually tempted to call Mr Bakshi after that contribution, but I think I had better call Mojo Mathers.

OK, well, I take my hat off to the previous speakers for managing to generate heaps of enthusiasm for what I consider to be a particularly uninspiring, pedantic bill. We will be supporting it. We do think that the basic point is correct. It was an unintended consequence of the amendment that we passed in 2003 to make the unrelated lender liable for consumer goods that were purchased by that loan. However, it is with quite a degree of frustration that we are debating this in the House at all. I cannot generate the enthusiasm for fixing up what I think is a fairly unintended mistake, because I do not see the bill as being either brave or inspiring or bold or any of those other things that I think members’ bills should be.

Yesterday my colleague Kevin Hague gave his valedictory speech in the House, and he challenged us all to be brave, to stand for something. Members’ bills are our opportunity to be brave and stand for something. We have just had my colleague Catherine Delahunty’s bill in the House, a public works amendment bill, and a number of speakers commended her for being brave, whether they supported it or they did not. We had a debate about some very real and very important issues about the grave injustice that had been done to the people in the land. I doubt that in this case there is really any grave injustice that is happening. If there is any injustice, it is happening to some firms that can probably carry the few rare occasions when that might be happening. I would be very interested to know if it does actually happen.

So, yes, it is frustrating to be standing here—a frustrating bill, an uninspiring bill. We will vote for it. That is really all I have got to say, because I do not want to be wasting the House’s time any further on this.

It is a pleasure to speak on this, the Consumer Guarantees (Removal of Unrelated Party Lender Responsibility) Amendment Bill. I would like to congratulate my colleague Dr Reti on introducing this bill. This is a very, very good bill. It is seeking to ensure that we apportion responsibility where it best rests.

This Government has done a lot of work around the responsibility of lenders to ensure that people who take out loans are well-informed and that those processes are very transparent, in order to seek to tackle predatory lending conditions and predatory lenders. Similarly, we are of the view that manufacturers and sellers are where the responsibility lies under the Consumer Guarantees Act—or where it should lie—for the fitness for purpose of the goods sold and, in fact, their durability. This is the part of the Consumer Guarantees Act that most consumers understand the most—that when they purchase a good, it should do what it is supposed to do and it should last for a reasonable period of time.

At the moment under the Consumer Guarantees Act it is possible that lenders who have no part in the specifications of the good or in the selling of the good can be held responsible for those elements of the Consumer Guarantees Act, and our argument is that they really should not be. Members opposite have asked for examples of this, and I will give what I hope is a nice, simple one. Let us take the purchase of a motor vehicle. If I go to purchase a car from a local car dealer and I go along to the bank—and my bank is the Bank of New Zealand—and I take out a personal loan for a sum of money that allows me to purchase that car, there is not a person in New Zealand who would hold that the BNZ has any responsibility for the quality of the car or for its durability and whether it lasts 1 year or 10 years. No one in New Zealand, I would suggest—no one in the public—would think that the bank in that situation should have any liability if the car, in fact, turns out to be a bit of a lemon and falls over after a couple of months.

You can take other situations where the dealer has some level of involvement, but one might then still question whether the lender in those conditions should have some liability. For instance, if I go to the bank and get the money myself, no one would see a link. But if I went to the car dealership and the dealership said “Well, I can arrange this loan for you with your bank, the BNZ.”, all it is doing is relieving me of a bit of administrative burden. In that case, I would argue that most people would say that, actually, the bank still has no part in the decision, quality, or specifications of the vehicle, because the loan processing in the application is being processed by another person to assist me.

Then you get into situations where it is not, say, a major trading bank but it could be a finance company not connected, as such, to the dealership but specialising in motor vehicle finance, and you could take the situation there. So there is no ownership relationship between it and the car dealer, but because it specialises in vehicle finance, it is a natural avenue for that dealer, to help assist a consumer or a purchaser wanting to buy a car, to get the loan to complete that transaction.

I look forward, actually, to debating in the select committee whether the financier in that position should have some liability. I would suggest the answer is still no. But to use a potential, real-world scenario, where we would hold—even under the changes that are proposed in this bill—that the lender could, and perhaps should, have responsibility, take where you have a motor vehicle group, say, that may have multiple franchises and it runs its own lending organisation. In that case, the dealership and the dealer are using their group of companies’ finance company to provide the loan so that a person can purchase a car from another member of that group. In that situation, I think it is very, very plausible that the public at large—and the purchaser of the vehicle, indeed—would also say that, actually, the lender in this situation is very much a party to the entire purchase and is not simply extending a line of credit so that one can walk into a dealership and buy a car.

I am sure that is an example that will be traversed in the select committee, which is where this very, very good bill belongs. Because I sit on the Commerce Committee, I look forward to scrutinising the bill and hearing submissions. At this stage, I would commend this bill to the House.

I would add my voice to those who have noted the sponsoring member’s aptitude, his intelligence, and his considered debate in the House oft-times, and, in fact, I would like to acknowledge Melissa Lee as well. She gave a good contribution this evening, so much so that both of them combined actually made me think about my position. But in the end it is a commiseration speech I give to Mr Shane Reti, because this is a non-event. It is an answer to a problem that does not really exist, and the circular nature of the contributions from that side of the House kind of underlies the issue with this piece of legislation.

Then Mr Hudson gave his contribution, which did not help the Government’s cause whatsoever. What I would point out to Mr Hudson is that he failed to recognise the Responsible Lending Code, which he kind of alluded to, but let us talk about that in a little bit more detail for the members’ and the public’s consideration. It provides the general principle that every lender must “exercise the care, diligence, and skill of a responsible lender” when advertising, before agreeing to provide credit or finance and taking guarantees, and—and—in all subsequent dealings with borrowers and guarantors. The code lays out the responsibilities lenders owe to consumers, in considerable detail.

So I put it to Mr Reti that he has kind of missed an opportunity here and, in fact, he is using the wrong piece of legislation to deal with this problem that does not really exist. He mentioned stakeholders in his original contribution, and I put it to the members on that side of the House that I think he was talking to the wrong stakeholders. He was not thinking about the consumers when he was engaging with those stakeholders. For example, I agree with Mr Shearer, in his contribution, that this is more about limiting the protections of consumers than it is about improving them. It is about improving the protection of the lenders, and New Zealand First would suggest to this House that that is not the recourse or the protection that we would want for New Zealand consumers.

So, regardless of how well-intentioned the member’s bill may be, the effect would be to weaken the protection of consumers under the Act. On principle, New Zealand First believes that where consumers’, suppliers’, and lenders’ rights intercept, there has to be a presumption and a preference to protect the consumer in those incidents, especially when we are talking about the Consumer Guarantees Act.

I have listened to the member Shane Reti about why he believes the bill would be good. However, we do not believe that, in so far as an issue of unrelated lenders being liable under the Consumer Guarantees Act exists, this bill is the best way to address the issue, as I intimated earlier. Instead, if an issue does exist, we would argue that these definitional issues are best resolved by the discretion of the courts, and they have, thus far, been doing that.

The Consumer Guarantees Act is a 1993 piece of legislation, and the courts have been using that piece of legislation to process these problems. Our courts have the ability to interpret this Act. The courts have this kind of broad interpretive discretion, and I believe that they are better placed to deal with the issue that Mr Reti so eloquently spoke to.

It is pretty clear. The intention may be right, but I think it is a missed opportunity. We do not support this bill going further. It is an answer that does not actually have a problem. We would like the bill not to proceed, and cannot support it. Thank you.

I seek leave for the House to rise at the conclusion of the Consumer Guarantees (Removal of Unrelated Party Lender Responsibility) Amendment Bill or at 10 p.m., whichever is earlier.

Is there any objection to that? There is none.

I am very pleased to take what will now be a short call on this Consumer Guarantees (Removal of Unrelated Party Lender Responsibility) Amendment Bill, which is quite symbolic, really. This is a fairly short, simple, and technical bill, but I am looking forward to it, and I hope that, through the votes, it is coming to the Commerce Committee, where we will be able to tease a few things out.

As the member Shane Reti has rightly pointed out, this is around, I think, the definition of a particular word, but, as we all know, particular words can have significant meanings. Really, this bill is doing just two things within that. It is saying that if the lender and the trader are, effectively, the same people, then they should be treated as one entity—in my own terminology. If they are not related, then, in fact, there should not be a relationship. I think it was Brett Hudson and Melissa Lee in particular who raised that, actually, just because you go to your bank and get a loan for buying a television—some other examples were used, but I am going to stick to televisions—the bank should not be responsible for that.

All I want to put on the record is that I think it is going to be quite interesting—putting my chair of the Health Committee hat on—to look at how doctors work. Often they lend money in different ways to help their patients. I will be interested to see how this bill deals with that. So I am very pleased at this point to recommend the bill to the House.

Well, in the spirit of the debate in the House tonight, can I congratulate Dr Shane Reti for having his member’s bill drawn from the ballot. Having a member’s bill drawn is an uncommon thing for some of us in the House, or a rare thing. Some of us have more bills drawn than others, but it is the luck of the draw and so it deserves to be taken seriously. Every piece of legislation—

💬 Sue Moroney: Well, most.

—pretty much most—deserves to have debate about its importance. The more that I am listening to the debate tonight, the more, as a member of the Commerce Committee—if this bill passes tonight, then I think there will be an interesting ideological, philosophical discussion, actually, about principles.

In my view, this bill is not a small change; this is actually, because it is a change to the interpretation in an Act, quite a fundamental change. So there are actually important points of principle here. We note that this was actually drawn from a paper written by The New Zealand Initiative, which comes from a particular ideological point of view—and I am making no comment about that. But when you change an interpretation—a fundamental interpretation—in a piece of legislation, it actually really matters.

My first point is that the description of the Consumer Guarantees Act in your amendment bill is actually not about a further protection for consumers; it is, basically, a protection for lenders. As a result of that, it diminishes the protection for consumers, so that is basically what we will be debating and discussing when it comes to the select committee, and what the impact of that is.

Another important point to make is—this is, I guess, around priorities—about what the priority is when it comes to consumers and guarantees around consumers. I commend the New Zealand First speaker, Fletcher Tabuteau, for raising the Responsible Lending Code, because there is much work yet to be done in that space. If you are going to be talking about consumer guarantees, it would be much better if we were adopting the course proposed by my colleague Kris Faafoi in his member’s bill, the Credit Reforms (Responsible Lending) Bill, which strengthens the protections for consumers against loan sharks and the enormous interest rates that loan sharks can impose, and the vulnerabilities that consumers end up facing. That is a fundamental change that would actually do a lot of good, in terms of protecting consumers. There has been a lot of public outcry around that particular issue.

It is really apposite to note, around this issue—where has been the outcry? Where is the problem? David Shearer, my colleague, raised that, and it has been reinforced by others in the House. Who is actually saying that this is a problem? Where is the call for there to be a change—a fundamental change—in the interpretation of the Consumer Guarantees Act, which has been in place for some time? What is the point of changing the interpretation of that, unless there is actually a problem that you are trying to solve? Not you, Mr Assistant Speaker, but the member Dr Shane Reti. I think that is what we will be trying to tease out if this bill comes to the select committee: what is the problem here? Why do we have a Consumer Guarantees Act? It is a mechanism. There are other pieces of legislation that recourse can be got from, but there are important reasons as to why the Consumer Guarantees Act exists and why those protections are there for consumers as recourse.

Fundamentally, I think this is an Orwellian piece of legislation, actually, because what you are proposing to do is the opposite of what the intent of this legislation actually is.

I would like to thank everyone from around the House for their contributions tonight. Undoubtedly, bills like this are improved when they go to a select committee, and I have no doubt that this will be too.

The only comment I would make is that when we look at international legislation and see how much stronger and firmer it is in this space—it is important internationally; it must be important for us also. I think we need to tidy up and strengthen what we are doing here. So, with that, I thank everyone for their contributions tonight, and, with the will of the House, the bill will advance to the Commerce Committee. Thank you.

I move, That the Consumer Guarantees (Removal of Unrelated Party Lender Responsibility) Amendment Bill be reported to the House by 31 January 2017.

Motion agreed to.

Sitting suspended from 9.57 p.m. to 9 a.m. (Thursday)