Lotu-Iiga Peseta Sam: Financial Service Providers (Pre-Implementation Adjustments) Bill — First Reading 
Lotu-Iiga Peseta Sam: Financial Service Providers (Pre-Implementation Adjustments) Bill — First Reading 
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PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I rise to support the Financial Service Providers (Pre-Implementation Adjustments) Bill. The thoughts of both the Minister of Commerce Simon Power and the chair of the Commerce Committee Lianne Dalziel have been expressed: it is about the efficiency of our financial markets. Like most countries around the world in the past year and a half we have suffered turmoil in goods and services markets but particularly in financial markets. This bill goes some way to addressing some of the concerns around public confidence in the financial industry. 
Some of the key changes as pointed out by the two prior speakers relate to the qualifying financial entity model. Those entities are regulated by the Securities Commission first and foremost to take responsibility for advice provided by employees and contractors on an extended range of products but not for advice provided by people who require individual licences to give such advice. The key change is the naming of individual contractors who provide such advice for which the entities take responsibility instead of their automatically being responsible for advice from all contractors. I think that is particularly important. It allows a degree of disclosure by those entities that provide advice. It allows investors and consumers alike to understand who is providing the advice and their responsibilities. 
This bill allows the entities’ employees and named contractors to provide advice on category 1 products which are complex products such as shares and various other instruments and financial products without being individually licensed. Under the current legislation this is permitted only for the employees of qualifying financial entities. 
This bill is part of a suite of reforms aimed at promoting confidence in the financial sector. The suite includes the Financial Advisers Act the Financial Service Providers (Registration and Dispute Resolution) Act as well as the Reserve Bank of New Zealand Amendment Act 2008. Some of that legislation was passed by the previous Government and the chair of our committee was the Minister of Commerce at the time. We are continuing much of the bipartisan attitude towards this part of our law. It is encouraging to hear from the chairperson tonight that she will be working constructively across party lines with our ACT and Maori Party members on the committee to ensure that this legislation is reported back on time and facilitates the purpose for which we are putting it forward. 
It is really critical that we go online in the middle of the year in terms of the register of financial service providers. Compliance is compulsory by early December—that goes without saying. We will welcome submissions by all stakeholders across the industry not just providers of financial advice but also consumers and investors who have been hurt by some of the finance company failures that have occurred in the last 2 to 3 years. 
If people are wondering whether there is a problem in the industry they have only to look at the  
Consumer 
 magazine article last year that outlined a mystery shopping expedition by the magazine that found that a number of key areas in the financial service advisers industry were particularly lacking. Those areas included lack of advice poor analysis by certain advisers inappropriate advice and questions around some of the costings provided by those advisers. 
This legislation aims to improve standards of disclosure which would ensure that consumers are better placed to assess the extent of an adviser’s independence. I think that is a critical point. It certainly has come through in the Commerce Committee’s finance company failures inquiry. 
The regime will ensure that advisers meet minimum standards of competency to ensure that they are able to provide the high-quality advice that investors expect. We all know that we cannot necessarily legislate for ethics and a certain competence and standard of behaviour. But we will certainly look at a regime that is regulated by the Securities Commission. I obviously support this bill going to the select committee. Thank you.