Hon LIANNE DALZIEL (Minister of Commerce) Link to this
I move, That the Financial Service Providers (Registration and Dispute Resolution) Bill be now read a third time. I am confident that this bill, coupled with the two other bills we have passed over the last couple of weeks, will increase confidence in the financial sector. They are all very timely instruments to provide that degree of support. I welcome in particular the availability of a register for financial service providers and also for all consumers having access to redress. These are mechanisms that will both result from this bill.
Hon Clayton CosgroveHon LIANNE DALZIEL Link to this
I understand that my colleague is chipping in on me from behind in order to make particular points, and I am simply responding to him so that it is recorded in Hansard.
Hon LIANNE DALZIEL Link to this
Well, if I had that number of shares and could not remember whether I—anyway, it does not matter; we will not go there.
The provision of registration requirements enables a negative vet to occur in respect of people who are acting as financial service providers. I acknowledge the very passionate contribution from the Māori Party member Hone Harawira, because I thought that his contribution picked up a very important aspect of this legislation that a lot of people have not quite recognised. It is that by requiring every financial service provider in this country to register, we will be putting the spotlight on some people who do not want to have a spotlight shone upon them. I think that it is very important that we have this legislation in place in order to achieve that. That means that the loan sharks themselves will all have to line up to be registered, but guess what? They will find out that if they turn up to be registered but are undischarged bankrupts; or are persons prohibited from being a director or a promoter of, or concerned in the management of, an incorporated or unincorporated body under the Companies Act, the Securities Act, the Securities Markets Act, or the Takeovers Act; or are persons subject to a management banning order under one of those Acts or to an order under section 108 of the Credit Contracts and Consumer Finance Act; or have been convicted of an offence against sections of this particular legislation within the past 5 years; or have been convicted of, basically, a fraud or dishonesty offence under the Crimes Act within the past 5 years; or have been convicted of money-laundering offences or of an offence relating to the financing of terrorism; or are persons who are subject to a confiscation order under the Proceeds of Crime Act, then those people will not be able to register as financial service providers. Although this legislation does not go as far as the fit and proper person test that will be required of people involved in non-bank deposit taking, this is very good legislation in terms of providing some basic protection for those who may need that protection, and we have heard about those people.
I will also comment briefly about how important it will be to have access to redress mechanisms, but in so doing I will acknowledge again the banking sector and the insurance and savings sector, which have already established their own excellent mechanisms to support those sectors to adhere to codes of practice that enable consumers to have their complaints addressed. They have been extremely helpful to work with in developing this legislation and very supportive of it, and now we will see consumer dispute resolution services available across the board. That provision will, of course, be handed over to my colleague the Hon Judith Tizard, who unfortunately is not able to participate in this debate, but, as the Minister of Consumer Affairs, it is right and proper that the provision relating to the implementation of the consumer dispute resolution services transfer to her.
I would again like to acknowledge the officials. Again we have had tremendous support from the Ministry of Economic Development, and, in this particular instance, the Ministry of Consumer Affairs as well. I will mention parliamentary counsel again, too. Although the challenges were not quite as great with this bill as they were with the Financial Advisers Bill, which was virtually a rewrite, in this particular case the Parliamentary Counsel Office was again able to deliver to a very tight time frame. I want to again acknowledge the members of the Finance and Expenditure Committee for the work they have done, and also the submitters for their very helpful contributions. There was no controversy surrounding this bill, because everyone sees the sense in it. I am very grateful to have the opportunity to express my support to the Opposition for its assistance in this regard, as well, and I commend the bill to the House.
CRAIG FOSS (National—Tukituki) Link to this
This is the third reading and final chapter of a suite of bills: the Reserve Bank of New Zealand Amendment Bill (No 3), the Financial Advisers Bill, which we dealt with this morning, and this bill, the Financial Service Providers (Registration and Dispute Resolution) Bill, which has leapfrogged up the Order Paper for reasons we discussed earlier.
I will pick up on what the Minister said in acknowledging all those who have pulled this bill together. I know we all worked on both financial bills as members of the select committee. It does disturb me just a tad that I do not think we had any speakers from the Labour side of the House who were on the select committee as we considered this bill. It is surprising, and I wonder why, but there is still time to hear from them. Obviously, the Minister was going to speak on it, but no members who saw the passage of this bill or listened to the hundreds of submissions on this bill and on the Financial Advisers Bill have spoken. If it is supposed to be a hallmark bill they are proud of, I am amazed that they do not talk on it.
I also note the acknowledgment of goodwill from all parties, and particularly from my colleague Simon Power who has had an awful lot to do with the pulling together of this bill and the Financial Advisers Bill. Yes, it has suffered a rewrite but at least we got quite good resolution towards the end. As I said earlier, this bill always sat on the sidelines a wee bit—it was a bit like the bridesmaid—but it is not too bad, in the form in which it has finally arrived in the House. National members have been voting for it all the way through, since its first reading, and again I acknowledge the cross-party support on this and other issues. I do not think it serves this Parliament very well when members chip in with little niggles and try to make political capital out of this bill, given the goodwill that has gone in from all parties to make this bill happen and bring it to the state it is.
The Minister raised a very good point. This bill brings some confidence back, and once it is in place, it will, along with the other two bills, bring some confidence into a sector that is sadly lacking confidence at the moment, given the conditions overseas that have washed on to our shores and given some of the issues that have been created within New Zealand itself. I acknowledge that about $5 billion of New Zealand’s funds are frozen or in receivership at the moment in various companies, but I reiterate that we have to distinguish between those that have suffered a market loss because market conditions have gone against the investment and those that have allegedly performed potentially illegal or misleading behaviour. Interestingly, the kinds of issues that would come up in the disputes sector here would be when someone has given money to a particular institution, under whatever prospectus it had at the time, but then the company itself has deteriorated on the way through. The person concerned may have inquired about the well-being of that company from an adviser, or taken advice that was the same as the original advice, but in fact the particular company itself had deteriorated somewhat. That is a very good example there of the need for some kind of disputes resolution process.
I also acknowledged earlier the foresightedness of not necessarily having to specify financial disputes resolution experts in the bill. I acknowledge that specifying just disputes resolution experts in the bill was very good. Also, many existing organisations already follow best practice and best behaviour, and have good and solid codes of practice, and, rightly, the Minister acknowledged them. We do too. They are setting the example. Sadly, as in so many things in life, a few bad apples spoil the whole bunch for a whole sector. There are billions and billions of dollars in New Zealand that are invested and held in trust by various entities that are quite safe, robust, and fair.
There is one interesting point that was referred to in one of the earlier speeches. The establishment of this register of all those involved in any financial advisory service in New Zealand forms part of the anti - money-laundering obligations under the Financial Action Task Force, which the Minister alluded to in, I think, her first speech, and possibly her second speech. But it is very, very wide ranging, almost a drift-net, to catch each and every person or entity involved in giving some form of financial advice. I go back to my point about how the select committee, on this bill and the Financial Advisers Bill, spent many, many hours with many officials trying to define what that meant. At first cut it sounds easy, but when we actually get down to the nitty-gritty it is very difficult. We had examples of the travel agent, which Mr Power alluded to earlier, and about insurance, and I alluded to the buying of foreign exchange when someone goes to a travel agent. Effectively, in earlier examples, they were deemed to be giving financial advice. But that has been cleared up by the previous bill, and if there is a dispute this bill would pick that up under the various tiers.
Again, National has voted for this bill. We are quite confident that it will give some confidence to a very uncertain market. At the moment, across the globe, other institutions are doing similar work, but at the end of the day what we do here is only as strong as regulation and our arrangements with other regulatory bodies overseas, and in this very mobile world where capital can flow around all over the place, the weakest link is our relationship with other organisations, countries, and institutions. On that note I do acknowledge work going on with the Minister of Revenue and the Minister of Finance in reviewing our various arrangements, treaties, pensions, and tax arrangements with various entities around the world.
On that note, yes, National will be voting for this bill. I have enjoyed speaking to it. I have learnt a lot, and again I acknowledge officials, the Minister, and Mr Power for the way they have worked together to make this good legislation.
CHRIS TREMAIN (National—Napier) Link to this
I rise to take a brief call to summarise where we have got to and to let the public know that National fully supports the Financial Service Providers (Registration and Dispute Resolution) Bill. Firstly, I acknowledge the Ministry of Economic Development and also the Ministry of Consumer Affairs and the efforts they have gone to throughout the consideration of the raft of legislation that has been put before the House. I think sometimes the work that officials do goes unrecognised. If we look in particular at the Financial Advisers Bill, which was totally changed from clause 1 onwards, we see that a heck of a lot of work had to be done in a very short space of time, and the officials should be complimented on that. It was well done, I say to them.
I want to talk about the importance of the financial investment sector. So often we hear in this House the financial sector being slandered. People say those involved in the sector are all loan sharks, and they are all trying to make an easy dollar. But without the financial sector, we would have very little investment. If investment occurred only through equity, then we would have way less business in this country—way less. What the financial sector allows us to do is to invest other people’s capital at a cost. The aim then is to go out and invest that capital in order to get a better return on it. That leverages up the economy and allows us to grow the economy in a way that we would otherwise not be able to do if we did not have the financial investment sector. Members of the New Zealand public need to understand that the sector is critical to growth in our economy. It is very important that we get behind the financial investment sector and not just send a message all the time to those involved in the sector that it is comprised of loan sharks and that they are all a pack of cadgers whom we should pack up and send to Australia. We need to have this sector in New Zealand, and we need to have a strong sector.
This bill, together with the Reserve Bank of New Zealand Amendment Bill (No 3) and the Financial Advisers Bill, puts in some tighter regulation around the sector to make sure that consumers are given a higher level of protection. But, once again, as I have said before, we are never going to legislate against risk. The fact is that all investments, whether they be with a savings bank or in property development, carry different levels of risk. People generally understand that the higher the level of risk there is, the higher the return will be, and the greater the chance will be of losing one’s money. But the important thing is that people are made aware of that—that that information is disclosed to them up front, so that they can make a decision based on material information and accurate information.
We believe that the financial sector is critical to this economy. Getting in behind it, and helping it to grow our economy, our businesses, and our property investment, are what will drive economic growth, and it is economic growth that allows our Treasurer, whichever side of the House he or she sits on, to take in a larger tax take, to deliver additional services, and to deliver the services that we want, require, and demand as a modern First World economy. It is a building block of our economy and something that we certainly support, and we send a strong message to the industry that it is a very important part of this economy.
In summary, this legislation provides much tighter regulation around the financial investment sector and ensures that the disclosure of information is much better than it has been. I think, all in all, the three bills, the Reserve Bank of New Zealand Amendment Bill (No 3), the Financial Advisers Bill, and the bill that is before us tonight, as a package help to do that. I think this bill will help to take us forward, and to get us back on the horse and investing confidently in the economy in a way that can drive us out of the recession we are currently in. Thank you, Mr Assistant Speaker.