Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): Well I'm always very sad to disappoint the Hon Chris Finlayson but I've got a good 10 minutes on the virtues of this bill. Often it's customary at the beginning of these addresses to heap praise upon the Minister who's introduced the legislation and that's generally appropriate. I think the Minister in this case has a well enough developed sense of his own value that I can leave that to one side.Instead I just want to track back a little bit to one of his predecessors actually because one of the interesting things about this bill is that it repeals the Financial Advisers Act 2008 and the Minister who introduced that Act was the Hon Lianne Dalziel who at that time was the Minister of Commerce in that Labour Government—the fifth Labour Government—and is of course now the Mayor of Christchurch. The reason that that piece of legislation was introduced at that time was because prior to that point we had something of a wild west in respect of our regulation of the financial services industry and it became very very apparent to this House to commentators and to many many people who were badly burnt that there simply wasn't adequate and coherent regulatory oversight of the sector. As the Hon Chris Finlayson just spoke of that has huge consequences for people—huge consequences—and that was the significance of that legislation at the time and this legislation which replaces it. We are talking about the regulation of a sector that we entrust—that we entrust—with the wealth with the assets of ordinary New Zealanders who are just wanting to do what we tell them to do in this House which is to save and invest and when it goes wrong that turns their lives upside down.So at that time the fifth Labour Government and Lianne Dalziel embarked upon a path of regulatory reform and brought in the Financial Advisers Act and it brought things together. But what has become apparent over the 10 years since that time is that while everyone agrees that we need to have a coherent regulatory framework not all parts of it have worked. It is entirely appropriate that in the years since then the roving eye of the machinery of government has cast its eye over the sector and cast its eye over the workings of the Act and has determined that it is appropriate to look at a range of regulatory changes.So what we have before us is a bill that amends both the Financial Markets Conduct Act which was passed in 2013 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 and it actually repeals that Financial Advisers Act 2008. There are a number of reasons for this and some of them have been well canvassed but one of the ones I want to touch on at the outset is the fact that we know that at the moment in part at least because of some of the quirks of the current regulatory arrangements we have huge numbers of New Zealanders who would benefit from high-quality and appropriate financial advice and who simply don't get it. They simply don't get.Some really interesting reports came out earlier this year from the Financial Markets Authority who of course oversee much of what we're talking about and they in particular were looking into KiwiSaver. Of course KiwiSaver is now the biggest vehicle by which New Zealanders save for the future—a great initiative of the previous Labour Government. I think something like $40 billion worth of assets are now piled up in KiwiSaver and that's great for New Zealanders' future. It's absolutely critical for the individuals who are saving within KiwiSaver but also collectively for us that those investment decisions are made well. But what the Financial Markets Authority has uncovered—and I'll read out the stat here: only three in 1000 people who invest in KiwiSaver get personalised advice about their investments. Only three per 1000—that's 0.3 percent. Now I don't mean to be unkind but that's about the level of support that the ACT Party gets and when you're getting down to that you know that it's a pretty low number.Hon Kris Faafoi: That's harsh.MICHAEL WOOD: It's harsh but it's accurate. Only three in 1000 get personalised advice.Hon David Bennett: Only 10 times what you got.MICHAEL WOOD: Ha ha! I can tell the honourable member that in my own electorate of Mt Roskill I received 6000 more votes than the ACT Party received across the whole of New Zealand at the general election this year in fact. Only three in 1000 and I think what we—Hon Member: Not that you've looked.MICHAEL WOOD: Not that I check on these things or anything. But what I can—Hon David Bennett: It's all about the party vote remember.MICHAEL WOOD: It is very valiant of the honourable member to come to the defence of David Seymour.Only three in 1000 people get that personalised advice before investing in KiwiSaver and what that means is that huge numbers of those people end up simply putting their KiwiSaver investments into default funds. Now default funds aren't always the end of the world but they're always set up to be the safe conservative place with relatively low risk. For some people that will be an appropriate investment but in fact for many people it is not an appropriate investment because KiwiSaver by definition for most people is a long-term investment and it doesn't particularly make sense to have your investments earning low returns over a very long term. If you're a person at the age of 30 you're potentially saving for 35 years into your KiwiSaver fund and in most cases it's going to make sense to take on a bit more risk realising that you'll ride out the ups and downs and be better off at the end of it. But because of that lack of quality advice huge numbers are simply going into those default funds.So just to pick out—and this is in the publicly available report from the Financial Markets Authority. At the ANZ bank only 6 percent of KiwiSavers made an active choice about which fund they were going into; at the ASB Bank only 1.5 percent; and at the BNZ bank only 3 percent. That points to a lack of—there's some sort of problem in the system. It's not necessarily a lack of advisers who are capable of giving advice but we have a system that is resulting in people not getting the advice that they would benefit from. So that is one of the real reasons we've got to get on top of this issue and ensure that New Zealanders who are investing are getting advice and are getting quality advice and know that that advice is in their best interests.So what does the bill do? Well it does a number of things. One of the quite interesting and innovative things that it does is that it introduces the capacity for investors to receive robo-advice—that is taking advantage of new forms of technology and that isn't necessarily talking to adviser at an office or over the phone but potentially through an app or through a computer program in which you might enter your risk appetite your life situation and your investment goals and through a series of algorithms you can receive robo-advice about the best kinds of investment for your circumstances. It's something that is in place in a number of other regulatory regimes and I think it's very much worthwhile this bill making provision but I think it's also worth saying—and I'm sure all members would agree—it's the kind of thing we want to give careful examination to at the select committee stage because again we are dealing with people's life savings.The Minister has given a very good overview of the way in which the proposed bill does seek to simplify and unify regulation across the sector. At the moment we have authorised financial advisers (AFAs) and registered financial advisers (RFAs). The reality is that for most people who walk into their bank or walk into an investment shop and want to get advice they don't particularly know what the difference is. In fact there's been some feedback received I think through the Ministry of Business Innovation and Employment in their consultations that suggests that people think that RFAs are qualified to a greater degree and perhaps they have a greater degree of surety about the advice they receive from RFAs. In fact AFAs actually have to reach a higher standard of competency and be registered.So the framework that comes through in the bill that is before the House seeks to recognise that problem and so what we actually need is a unified framework. Any time that a retail investor the ordinary mum or dad or person who wants some investment advice goes to an investment adviser they should know and have the confidence that that person acts in their best interests. That is enshrined in the bill.That isn't the case necessarily with all advisers at the moment. Investors should be absolutely certain that those people have a level of skill and competency that can be relied upon and that should be enshrined through the bill through a code of conduct and through competency requirements. They should know that there's somewhere to go if it goes wrong. So through the bill we've set up various mechanisms that allow that including a disciplinary process that allows for fines of up to $10000. I do have to say given some of the assets that are at stake that it sounds to me to be maybe a little bit on the low side.I just want to tag a couple of issues that I do think the select committee does need to have a really close look at it in its consideration. One is the difference between sales and service. When you talk to advisers in the sector particularly the small guys there is a real concern that sometimes sales and service get merged. There have been some pretty disturbing stories about big financial institutions incentivising RFAs at the moment to sell products to people. That is not acting in the best interests of the client which should be paramount in the regulation of financial services.The final thing we need to look at is that point of making sure that we're not just having a regulatory framework that is good for the big end of town—the big banks that have huge numbers—but having one that actually also allows for a thriving network of independent smaller investment advisers who can give very good quality advice to clients. I commend this bill to the House and look forward to the next stage of its debate.