Dalziel Lianne: Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Dalziel Lianne: Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill — First Reading 
[Sitting date: 25 July 2012. Volume:682;Page:3931. Text is incorporated into the Bound Volume.] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I move  
That the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill be now read a first time. 
 It is my intention to move that the bill be referred to the Commerce Committee for consideration provided I have the support of the very generous members on the other side of the House who have recently been speaking on another bill. The reason that I am hoping that there will be support in this House for this bill is probably that the pressure for this legislation has diminished as a result of the settlement between ANZ and ING who were the original reason for this particular measure and the Commerce Commission. The Commerce Commission and ANZ and ING came to a settlement back in June 2010 which was after I had drafted this particular bill. I was not as fortunate as the previous speaker Simon O’Connor was on his bill having had it drawn from the ballot at the first instance. I reinstated it into the ballot after the general election and it was then that I was fortunate enough to have it drawn. 
However the issue that came to the fore in that particular case as I say has been addressed with the settlement but does not prevent the same thing from happening again which is why I think the bill is important and why I hope that members opposite will agree to refer it to a select committee. I know that some members were mistakenly of the view that this matter is now addressed in the Securities Commission legislation and the Financial Markets Authority legislation but this particular situation arose out of having to preclude the response of the two particular regulators which were the Banking Ombudsman and the Commerce Commission. The legislation surrounding them does not provide the same protections that are available under the securities legislation. I did just want to make that point because I would be very disappointed if people did not support the bill based on a misapprehension of the particular issue. 
There are a lot of people in this House now who probably do not have the same history around this legislation; certainly it got a lot of publicity at the time. Some members of the House will not have heard about the ING-ANZ Frozen Funds Group Trust which was established and one of its leaders a guy called Gerard Prinsen. I actually brought a photo to the House. This is a photo that sits on my desk. It has “Dalziel’s Bridge” written on it. It is actually a photograph; I have no idea where Dalziel’s Bridge is. If anyone does know where it is it would be very nice to go and see it. It could be Scotland and there it would be called “Dee-elle’s” Bridge. But anyway the reason that I always thought that this photograph was kind of amusing was because my press secretary always used to say “Build a bridge.” which was her way of saying “Get over it.” But the message that came with this photograph—and this was presented to me by Gerard Prinsen—was that the strongest bridges are built while the rivers run dry. The point is that there are times when we have an opportunity in this House to take up a case on behalf of a group of people who have been unfairly treated or who have found themselves in a situation where they look to Parliament for a solution because they cannot find that solution within the community or within themselves. 
What this bill does is be a bridge; it is designed to be a bridge. It bridges the gap between those who have the power to impose intolerable conditions on others when a settlement is being negotiated and to say it is a fair deal and those who have no alternative but to accept the offer while it is on the table. And why do they have to accept the offer? Because those offers are always made with a deadline and if the offer is not accepted by the time the deadline comes then where do you stand? Does that really leave people in a position where they are bargaining on a fair basis? That does not actually stop a hard bargain being driven certainly even by a person in a dominant position. What this bill is designed to do is to stop them being let off the hook for behaviour that does not meet the legal standard imposed by a regulator—in this particular case the Banking Ombudsman or the Commerce Commission. 
I think the most difficult experience that I had as a Minister of Commerce was the sense of helplessness that I felt as I watched the inevitable domino effect that flowed from the original finance company failures in 2006. The fact that my predecessor had already begun a consultation process in terms of the regulation of financial advisers and that I had already released nine discussion documents collectively known as the Review of Financial Products and Providers before the first string of finance company collapses occurred really paled into insignificance against the extent of the losses that people had suffered. And it was not like the proverbial run on the bank either. Fixed-term investments meant that thousands of people literally held their breath until they could take their money out. Of course once they could take their money out there was the second string of failures beginning with the collapse of Bridgecorp in 2007. 
I received report after report after report of people facing individual financial ruin as a result of an investment decision in one of these companies. It became very apparent to me that it was not greed that drove the investment decisions—I think greed had a place but it was at the other end of the spectrum—but rather a lack of knowledge about the nature of the risk that people face. I just want to quote from the media release that the Commerce Commission put out at the point of settlement: “It is important that consumers are able to make properly informed decisions based on clear and accurate information. Investors decide where to invest their money based largely on their appetite for risk. Throughout our investigation investors have told us that they would not have invested in these funds if the actual risk had been represented accurately”. That was what was so fundamentally wrong. 
The examples of the lack of integrity in the sector have really been the most appalling aspect of what has occurred and although commentators rail against the failure to regulate fast enough I have to ask the question of where the major exposés were that led people to be aware of the nature of the risk that they were facing. And the truth is that a lot of people in the media were silenced by threats of legal action from those who did not want to have the real risk exposed. So we are dealing with powerful organisations well resourced up against the little guy. In the case of the media they are even able to prevent them from publicising the risk that people face. 
I just wanted to say that because I did want a context for the legislation and I just want to say what was objectionable about the ANZ-ING offer. It said this: “By accepting this Offer you agree to surrender settle and release all other rights or claims you may have against certain parties in connection with the relevant Fund … including any claims or the extent of any claims of which you are not currently aware and any claims brought on your behalf or for your benefit by another person. … It also means you are agreeing not to benefit from any claim made by any other person in connection with the Funds …”. A release disclosure document was annexed to the offer letter and this contained a list of those covered by the release—ING ANZ New Zealand Guardian Trust and every single one of the financial advisers who had advised on the investment in the fund—and referred specifically to investigations being undertaken by the Banking Ombudsman and the Commerce Commission. The question that was really raised for me was whether as a matter of public policy companies that may have transgressed the regulatory framework that is designed to protect investors should be allowed to make a settlement conditional on these terms. 
So this is the question that this bill seeks to answer. It may not be the perfect answer and there may be elements of it that the select committee would like to address. I am perfectly open to that. What I do want this House to do though is to refer it to the select committee so that these people who did not have their day in court can essentially have their day in court in front of the select committee.