Chauvel Charles: Securities (Disclosure) Amendment Bill Financial Advisers Amendment Bill — Third Readings 
Chauvel Charles: Securities (Disclosure) Amendment Bill Financial Advisers Amendment Bill — Third Readings 
[Volume:655;Page:5118] 
CHARLES CHAUVEL (Labour) 
: 
 I rise to speak in support of the third readings of the Financial Advisers Amendment Bill and the Securities (Disclosure) Amendment Bill. I will speak first on the Financial Advisers Amendment Bill. 
In Lianne Dalziel’s third reading speech she spoke about the importance of confidence in these times and nobody could dispute that that is the case. Confidence is an elusive phenomenon and it is important that this Parliament does nothing to undermine it and everything to bolster it. Certainly the previous Government tried to do that when it regulated this sector of the market that had previously been unregulated passing a suite of related measures near the end of its last term. Those measures included the Reserve Bank of New Zealand Amendment Act 2008 which for the first time brought non-bank deposit takers into the supervisory orbit of the Reserve Bank. Previously they had simply been administered by their trustee and no one else. There was also the Financial Advisers Act which put ethical requirements on the industry for the first time. It was an industry that many New Zealanders had not received great service from. The issue of undisclosed or hidden commissions for example had recurred in this industry many many times. We legislated to ensure that a proper set of ethical standards would apply to those engaged in the giving of financial advice. The final part of the suite of measures to do away with New Zealand’s Wild West image in the finance sector was the Financial Service Providers (Registration and Dispute Resolution) Act. 
 Of all those measures the last piece of legislation—for members who are not familiar with it—put in a requirement that all financial providers as defined should be registered and that they should be part of an industry complaints scheme so that if people had concerns about their conduct then there would be an industry body supported by the relevant subset of the industry to whom those investors could appeal. Again it was an attempt to try to put some confidence into the market because that confidence had not been there previously thanks to the completely deregulated nature of financial services in that part of the market in New Zealand. 
In relation to the financial advisers legislation members who were on the Finance and Expenditure Committee in the previous Parliament—and each of these three bills went through that committee at that time—will remember that there was a substantial rewrite of the legislation in the committee itself thanks to feedback from the industry. Effectively an exposure draft of the legislation had been released. The bill when it was read a first time reflected that exposure draft but then we received a lot of feedback from the industry and from consumers about the provisions of the legislation. As a result of that feedback substantial changes to the legislation were made in committee. I think that as a result of those changes—even though I say so myself having chaired the committee—the bill ended up being much better. But it is not surprising given the extent of those changes and the speed with which they were dealt with—because we wanted to get them through the parliamentary process prior to the expiry of the previous Parliament—that there were one or two mistakes. Those typographical errors will be corrected by this legislation. As I said in my first reading speech no one should be concerned about the changes being made. They are sensible logical ones and they will ensure that the bill is better as a result of our efforts today. Labour supports the Financial Advisers Amendment Bill. 
In respect of the second measure with which we are concerned today the Securities (Disclosure) Amendment Bill much has been said by both Lianne Dalziel and Katrina Shanks who both had the benefit of hearing all the submissions at the Commerce Committee. I will content myself with just a couple of remarks. As we heard this bill was another confidence-building measure. Lianne Dalziel as the previous Minister of Commerce set up the Capital Market Development Taskforce in July 2008 under very different economic circumstances—it was a time of much greater plenty and prosperity—to those in which we find ourselves today. The aim of the exercise was to look at how we could broaden and deepen New Zealand capital markets given the circumstances halfway through last year. We recognised that there was a problem with businesses in New Zealand being able to access the sort of capital they needed in order to grow. We wanted to make sure that as part of their contribution to a more prosperous stable and fair New Zealand they had the ability to do that. So the idea was to get a group of experts together to listen to their recommendations as to how to better facilitate access to capital for business and then to get on and implement those recommendations. 
Well as history shows the recession hit and the current Government decided that it would ask for an interim report from the task force. It received that report shortly after the election last year. This legislation implements some but not all of the recommendations of that report. One sensible measure that the legislation will implement was referred to by Katrina Shanks—the waiving of the requirement for a full prospectus in certain circumstances. That makes a lot of sense. Actually securities law in New Zealand still requires prospectuses in far too many situations—for example in respect of issuing employee share schemes. In many cases it is just a completely unnecessary exercise and I hope the law will come to deal with further unnecessary examples of circumstances when prospectuses should not be issued. As has been observed there is a degree of irony in deregulating in these circumstances rather than reregulating given the causes of the current financial crisis. But here we are; we are doing that. We are doing that on the basis of the recommendations of the Capital Market Development Taskforce. The recommendations seem to make quite a lot of sense and for that reason Labour is supporting the legislation. 
Finally I wish to echo the point made by my friend Lianne Dalziel which was touched upon by the previous speaker as well. It is quite wrong to equate the wealth of investors on the one hand with their sophistication on the other. It is not necessarily so that just because people have a lot of money in the bank they will be sophisticated investors. Some people for example may inherit money from an estate and find themselves in certain circumstances in possession of quite a lot of money but none the less they may not necessarily be terribly clued up as to how to deal with that money. It is a little bit like the situation in respect of the Disputes Tribunals Amendment Bill debated earlier whereby Chris Hipkins made the point that it is not right for example to equate the complexity of a matter before a court with its monetary value. Matters relating to quite large sums of money can be relatively simple in respect of a dispute. Just because a lot of money is involved does not mean that it will necessarily be complex and just because the investor is wealthy does not mean that the investor will be sophisticated as sadly the history of our finance company collapses in this country despite the suite of protective measures to which I have referred demonstrates. 
But having said that I tell the House that the Labour Opposition supports both measures. Although they are relatively modest bills particularly the latter one we hope they will go some way towards continuing to maintain confidence.