3. MARYAN STREET (Labour) Link to this
to the Minister of Commerce
What were the principal objectives of the review of financial products, providers, and intermediaries, and how have those objectives been achieved?
Hon LIANNE DALZIEL (Minister of Commerce) Link to this
The principal objectives of the review were to give investors confidence, to improve consumer protection, and to ensure that New Zealand meets its international obligations. These have been addressed, with the announcement that all financial service providers will be registered, subjected to a range of background checks, and required to belong to an approved consumer dispute resolution scheme. Non-bank deposit takers will come under the prudential supervision of the Reserve Bank, and, as part of that, will be required to have credit ratings, enabling investors to know the risk they are taking with their hard-earned money.
What was the process for conducting these reviews, and what has been the response to the announcement?
Hon LIANNE DALZIEL Link to this
The reviews involved input from a task force and from several expert groups that were involved in developing the discussion documents that were put out for public submissions last year. It is therefore not surprising that the response from the financial sector has been incredibly positive, with financial service providers welcoming the greater professionalism that will result from the new framework. As one finance company chief executive officer said in describing credit ratings as a good move: “By having ratings it creates that platform whereby the investor can actually compare one opportunity with another.” I think this has been a very good result.
Simon PowerCan she advise real estate agents and bank tellers whether information they provide to people who wish to invest, such as “The term deposit rate for today is 8.5 percent.”, will see them categorised as financial advisers under this new regime?
Hon LIANNE DALZIEL Link to this
I have not heard a real estate agent offer that advice before, but I can tell the member that the detail that he has asked for is in the public arena, in the form of all the questions and answers that we provided his office with yesterday. Real estate agents will be covered as financial advisers if they are providing advice on investment property. If they are providing advice on investment property, they will be caught by the new regime. Bank tellers will not be caught by the new regime, because they are not giving financial advice when they are simply providing information that is available at the bank.
Will fringe moneylenders, also known as loan sharks, be included in the publicly available register; if so, what sort of people will not be operating such businesses in the future?
Hon LIANNE DALZIEL Link to this
Yes, they will. Those with dishonesty or fraud convictions within the last 5 years, money-launderers, undischarged bankrupts, and those subject to a confiscation or forfeiture order under the Proceeds of Crimes Act will not be able to operate as moneylenders in the future. In addition, these loan sharks will have to belong to an approved dispute resolution scheme, which means they will have to be more careful about compliance with the Credit Contracts and Consumer Finance Act, which we suspect is not always the case at the moment. This regime represents a substantial strengthening of the existing law, and I am sure the Minister of Consumer Affairs will be watching the implementation very closely.