Nash Stuart: Non-bank Deposit Takers Bill — First Reading 
Nash Stuart: Non-bank Deposit Takers Bill — First Reading 
[Volume:674;Page:20534] 
STUART NASH (Labour) 
: 
 I will not take a long call on the Non-bank Deposit Takers Bill for the main reason that I am very keen to see this bill rushed through the House and turned into law. 
I suppose one of the things that underpin any financial system is investor confidence. As Lianne Dalziel talked about earlier there is risk in every investment—of that there is no doubt—and reward is often a function of risk. However there is one type of risk that New Zealand investors should not be party to and that is the risk of negligence or incompetence by the directors who are there to maintain the integrity of these investments. 
We all know that the integrity of a lot of the directors of the finance companies that fell over was called into question to the point where some of those characters have been dragged through the courts. I hope that a lot of those characters will be made examples of and that they will be sent down because they ripped about $6 billion out of the pockets of New Zealanders who trusted them who saved hard and who put money away for a whole raft of reasons of which every one was good. As Lianne said perhaps those investors did not price risk as well as they could have and they certainly did not know—and could never have known—about the risk of incompetence and negligence. 
I will give the House a quote. In the first reading debate on the Reserve Bank of New Zealand Amendment Bill (No 3) Dr Michael Cullen noted: “The amendments in this bill implement the first phase of the new non-bank deposit taker framework. A second bill to be introduced next year will cover the remaining amendments required to implement the registered non-bank deposit taker regime including licensing and fit and proper requirements.” I suppose the point of reading out that quote is to remind the House that it has been 3 years since Dr Cullen made that speech. I wonder whether—and this is a question; I am not casting aspersions—the Government has taken its eye off the ball and has been a little bit negligent. “Negligent” is probably too hard. 
My personal view is that this sort of bill should probably have come before the House 18 to 24 months ago. In fact this bill probably should have been on the first Order Paper put out by the current Government. The reason I say that going back to my initial point is that confidence is what determines the robustness of financial markets. Without this sort of legislation ordinary New Zealanders do not necessarily have confidence in this sector which absolutely collapsed around their ears. The Non-bank Deposit Takers Bill is the sort of bill that restores the confidence in markets and—goodness me—if we need anything in this country at the moment it is investor confidence. 
I ask what the Government has been doing with regard to this. I know Simon Power has put through a lot of bills. We have also seen a lot of bills come through the House over the last 2½ years that are important to certain sectors—of that there is no doubt—but this bill is important to the whole country. As Lianne Dalziel outlined this whole process started about 5 or 6 years ago. Maybe it should have started earlier; it does not matter. But it could have been finished within the first 6 months of this Government taking office. 
I will talk very briefly about two of the most important provisions. The first provision is that this bill will give the Reserve Bank the power to vet and remove directors of non-bank deposit holders in certain circumstances. As I mentioned there are too many shady characters out there and we have to do whatever we can to make sure that these guys never hijack a sector like they did with the finance sector. 
The other most important element in this bill—well I think it is the most important element—is that it requires non-bank deposit takers to be licensed by the Reserve Bank subject to analysis by the Reserve Bank of the applicant’s ability to meet the prudential requirements and other legislation. This basically gives the Reserve Bank the power to grant a licence but also the power to delicense non-bank deposit takers who do not meet acceptable standards. 
As I sum up I come back to the first point I made and the most important point which is that the finance sector in our country absolutely needs confidence restored in it. This Parliament can do that and it is my personal belief that this should have been done earlier. It was not but let us get this bill through. Thank you very much.