Nash Stuart: Financial Service Providers (Pre-Implementation Adjustments) Bill — Second Reading In Committee 
Text is incorporated into the Bound Volume 
Nash Stuart: Financial Service Providers (Pre-Implementation Adjustments) Bill — Second Reading In Committee 
[Sitting date: 22 June 2010. Volume:664;Page:11959. Text is incorporated into the Bound Volume.] 
STUART NASH (Labour) 
: 
 As my colleagues and those on the other side of the Chamber have spoken about numerous times we all support the Financial Service Providers (Pre-Implementation Adjustments) Bill. But I think we need to ask why the Financial Advisers Act needs to be amended so soon after it was first introduced. I think as my colleague Lianne Dalziel highlighted this bill was on the legislative agenda that the Labour Government really wanted to push through before the election. Ms Dalziel knew that if it did not go through before the election then nothing would be done for quite a long time. The vast majority of Kiwis were looking to Parliament for direction in this area. It was not a contentious bill at all; it was borne out of the recognition that so many ordinary Kiwis have been let down by a sector that they were not expecting would let them down. 
I gave a couple of analogies in my speech in the second reading and I will return to those. When we want legal advice we go to a lawyer. To practise as a lawyer one must have a law degree and must be admitted to the Bar and if one makes a mistake as a lawyer or is involved in negligence or incompetence one goes to a law committee. A whole lot of checks and balances are in place to ensure that the public are well served by the law profession. The same is true if one wants to talk to an accountant. One goes to an accountancy firm speaks to a qualified accountant and gets good advice from the accounting profession. If people do not get good advice if they feel they have been let down or if they feel that the advice has been incompetent there are ways and means for the public to go to the professional body and get redress. 
The situation with the financial services sector was completely different. People used to joke about it. If it was not such a serious issue for the vast majority of New Zealanders—and more so for a targeted lot who have actually lost everything—then it would be quite humorous. People used to say that as there was no work in the building industry they would become financial advisers. It was a bit of a joke. We saw the growth of an industry where people with no qualifications and no experience whatsoever would tout themselves as financial advisers. 
The thing about New Zealanders is we have a bit of a DIY attitude to investment. We talk to our mates or read the paper and we think we know how to invest our money well. Occasionally if we do not know anything about it we will go to someone who touts himself or herself as a financial adviser. To me a financial adviser should be able to provide sound financial advice on what I should do or where I should invest my money. The lack of rules or regulations requirements for qualifications or any professional body sets off alarm bells. But of course how are the vast majority of New Zealanders to know any better? They do not. A financial adviser was out there to advise them what to do. 
I come back to the question: why does this legislation need to be amended? Well Ms Dalziel wanted the legislation to be passed because it needed to be passed. The building blocks of sound prudential regulation needed to be put in place because if they were not in place before the election it would take quite a while after the election. The Minister of Commerce Simon Power claims that the new legislation we are debating now will actually reduce costs and encourage public confidence back into the industry. I say that it will take a while before the public once again has confidence in this industry. We all know someone who has been burnt and we have all read the stories about people who have been burnt. But the 2008 legislation was a very good first step and this bill is a very good second step. 
The bill basically consists of technical amendments designed to ensure that the new regulatory regime can be implemented efficiently and consistently within existing policy frameworks. It just builds on what is already in place which of course is what a lot of legislation does. But this bill does it in a very positive way. I will give members one example. According to Bruce Kerr who is the executive director of Workplace Savings NZ this bill “will offer more certainty to employers who assist their employees with retirement savings arrangements.” Members may ask why. Well if employees come to an employer and ask where they should invest their retirement savings the employer can now I believe say with confidence: “Here are some sound financial advisers. You can have confidence in these people and you can have confidence in the industry.” So it is a whole flow-through process. Mr Kerr had been concerned that employers who make retirement savings arrangements available to their employees through the workplace would be caught by the definition of a “financial service provider” but this bill avoids this difficulty. It takes out a lot of those anomalies that often occur when legislation is put through—not under urgency but in a hurry—to fill a gap.