Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Mr Speaker. It's a pleasure to be talking on the Deposit Takers Bill and National will be supporting this bill. Like the Minister said this is one of the few occasions where a committee has worked genuinely to try and get a better outcome for this specific bill. I think some of the changes that the committee have put forward are very helpful in that regard so I just want to acknowledge members of the Finance and Expenditure Committee and also the submitters that helpfully identified some of the key issues with the original proposed bill.But on that note and just on a wider concept as the Minister said this is the third of three changes to the Reserve Bank. Obviously we've had quite a significant restructuring of the Reserve Bank which is normally done in a bipartisan manner—unfortunately that hasn't occurred which is a concern to us us" being National—but this where we've seen changes to the monetary policy framework general Reserve Bank changes is the third one around prudential policy. Many people don't understand what that means but it's about putting in place the right financial frameworks capital adequacy oversight mechanisms as a regard in this particular bill to financial institutions. But it also relates in a potential sense to other institutions such as the insurance sector and we are concerned about how this is going to be overseen by the Reserve Bank and particularly the skillset—or in some cases the lack of—by the members of the board of the Reserve Bank and whether in fact we've got the right framework going forward.But on that note I just want to turn specifically to this Deposit Takers Bill. As the Minister correctly pointed out it has some very significant aspects the first of which is around the protection of deposits up to $100000. This is something we discussed at length and as the Minister quite correctly pointed out New Zealand is an outlier in the sense that we don't have deposit taker insurance. This has been set at $100000 which we thought was an appropriate level. What we did do as a committee was exclude foreign money held by New Zealand institutions in foreign bank accounts. It's an issue that we looked at quite carefully. We wanted to make sure that people weren't able to use the scheme in a way that wasn't really about protecting the base $100000 invested or held by New Zealand banking institutions and non-bank deposit takers. So we put some rules around the $100000 and just made clear that if there was a shortfall in the levies the Minister of Finance could step in and make that shortfall up which is quite a legislative change because that would require him or her acting without necessarily having parliamentary scrutiny. But what we did require was that any such actions were subject to parliamentary scrutiny.Also in terms of the levy itself we wouldn't support a levy system that helped promote the idea that people could just recklessly put money on deposit and hope that the scheme was going to benefit them. We would want to make sure that there was no excess cost to depositors. So there's some rules around that. Obviously we haven't seen the rules around how levies are going to be set but we do want to make sure that they are appropriate and it will be something we will be monitoring very carefully.On other issues of this bill a prime aspect about this was about making sure that the 13 non-bank deposit takers weren't unduly disadvantaged by an overreach in terms of the Reserve Bank placing restrictions and regulations over the top of them. When I talk about non-bank deposit takers I'm talking about credit unions; I'm talking about building societies and retail-funded finance companies. These are reputable companies that are subject to Reserve Bank oversight—that as such they comprise regulated financial institutions which has a technical meaning. What we were very concerned about—and I do acknowledge some of the members on the committee—was making sure that they are protected they are looked after and they're not drowned in regulation. Our prime concern was to make sure that even though the New Zealand banking sector is dominated by four Australian-owned banks these non-bank deposit takers hold a very important role in terms of the different type of finance they provide—to in many cases vulnerable New Zealanders or people who find it more difficult to access traditional forms of finance and banking services. So we were very careful to make sure that the Reserve Bank was mindful of that and had explicit regard for that fact.In fact we required that the bank actually set out enough clarity around how it was going to set the standards for those deposit takers. We wanted the bank and required the bank to actually publish and keep up to date a proportionality framework. This is very very important and I know many people from the non-bank deposit takers were very keenly interested in this point. My personal view is that I think where we've ended up with the provisions in this bill is adequate to have regard to proportionality. We've made it very clear to the Reserve Bank that they are to have sufficient regard for this and we've made sure in the commentary to the bill that that point is very clearly set out so if there is any dispute people will be able to turn and look at that commentary that prefaces the bill and see what the intent of the committee was. That is a very very important aspect and I think it's important that we let the legislation work now and see whether in fact we struck the right balance. Of course we can always come back later and add further provisions if we need to but my personal view is that where the committee has landed it provides enough clarity for people and enough opportunity for people to be involved in that process to make sure that we get a proportionality framework that is fair and equitable and does deliver different forms of finance to New Zealanders who are seeking such requirements. Another example of that is that there was a proposal to carry over the credit rating provisions in the previous Act. We said that that may not necessarily be required or appropriate to non-bank deposit takers. There are two aspects to that. We said that in determining whether the Reserve Bank should impose a credit requirement credit assessment they should have regard to the size and nature of the deposit taker's business and secondly whether or not the risk of not having a credit rating could be mitigated by applying additional terms or conditions to the exemption—so again trying to take a practical aspect to that.There was also the issue around liability of directors and CEOs. Again the bill anticipated that directors would be liable for failings if there weren't proper checks of the information being provided to the Reserve Bank. It wasn't proper wasn't exactly accurate and the big issue we contested is whether in fact that was appropriate. We're talking of in many cases very large institutions and directors should be able to rely on senior executives of those institutions particularly if they're banks. So in the context of where a director might potentially be liable up to $1 million we thought that there needed to be a better balance struck between the liabilities of directors and the ability of directors to be able to rely appropriately and diligently on the efforts and the conclusions of the executive team. It doesn't absolve directors if they act inappropriately but it does provide for a reliance on executives and we made sure that that came through in the bill—and also in respect of foreign-owned companies where they should be able to rely on CEOs because in many cases they don't have directors directly involved in managing those businesses. That was an important component of this bill and I think another important aspect to it.We've run out of time but I'm sure my colleagues are going to pick up other parts of this important bill. Thank you very much."