12. DAVE HEREORA (Labour) Link to this
to the Minister of Commerce
What action does the Government intend to take to improve regulation of the non-banking financial sector?
Hon LIANNE DALZIEL (Minister of Commerce) Link to this
In June this year I announced decisions arising from the extensive review of financial products and providers and financial intermediaries. Those decisions were to register all non-bank financial institutions, strengthen the current model of trustee supervision, strengthen the prudential regulation of non-bank deposit takers, provide for more comprehensive regulatory oversight of financial intermediaries, and provide for effective consumer dispute resolution and redress.
Can the Minister confirm that this review is the last stage of an extensive programme of financial sector reforms?
Hon LIANNE DALZIEL Link to this
Yes, which is why it is important to continue the process that has been carefully developed with key stakeholders, and that follows sound regulatory analysis and principles. However, given the recent finance company failures, I have asked my officials to examine whether there are any common threads in these failures, and to see whether any intermediate steps can be taken to improve the regulatory environment in the interim. I am also discussing this issue this week with the head of the Securities Commission to ascertain whether she feels that the Securities Commission has sufficient powers, along with the trustee companies that provide front-line supervision, in light of these failures.
Has the Minister seen the report in the New Zealand Herald this morning warning investors they need to do more homework before putting their money into finance companies; if so, what is her response?
Hon LIANNE DALZIEL Link to this
Yes, I have; I believe that the report contains very sensible advice, including the kinds of questions that investors should ask their financial advisers, such as whether they have read the prospectus, why they are recommending this particular investment, and what they know about the directors and financial management of the company. When we announced the decisions of the review of financial products and providers, I made the point that some of the products on the market are mis-priced, which means some investors do not realise the real level of risk they are taking with their hard-earned money. That is why asking these questions is so important.