O'Connor Damien: Financial Markets Conduct Bill — In CommitteeText is incorporated into the Bound VolumeO'Connor Damien: Financial Markets Conduct Bill — In Committee[Sitting date: 27 August 2013. Volume:693;Page:12994. Text is incorporated into the Bound Volume.]Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I am very happy to take a call on this bill the Financial Markets Conduct Bill. If you have a look at it it might look like a doorstop but actually reading through it I feel that it is more like a finger in the dyke of the financial challenges facing the world at the moment. Labour does support it because it is necessary but when I go through and read that the bill does not adjust current legislation in regard to insider trading market manipulation security holder disclosure and continuous disclosure provisions I am concerned that perhaps it does not go far enough. But it is a step in the right direction.I have to acknowledge the Hon Lianne Dalziel a predecessor of the Hon Craig Foss who initiated this process. The Capital Market Development Taskforce in 2008 which gave rise to this legislation was necessary because there has been a lack of faith in the capital markets in this country for very good reason. Small investors have quite frankly been ripped off time and time again. This legislation is necessary. It makes a huge number of changes but I point out to the Minister in the chair the Minister of Commerce that I am concerned that some key provisions in commerce law and disclosure requirements have been omitted from major change and improvement. In a small country like New Zealand that may continue to provide uncertainty and a lack of trust although as I say the bill goes a long way.I would just like to ask the Minister something. I guess we can as politicians make judgment in this area. We are next to car salesmen and I guess financial advisers in terms of reputation and so we can look at one another very very critically and ask why we are not doing better. If I go to clause 19 “False or misleading representations” set out on Supplementary Order Paper 220 I have to say that it is really concerning that we have people or we have had people I guess—we are making changes—who were able to get away with this for so long. But we are making changes.One of the things that I question is how bank employees will be treated under clause 19 in terms of products that have any “sponsorship approval endorsement performance characteristics accessories uses or benefits”. Look it is well known in the banking sector that there are bonuses for people. One particular area that I am pursuing and that the Commerce Commission is currently looking at is that of swap loans. They are financial products that have been offered not as we have often referred to here in taking people’s money for investment but actually providing capital in a similar way though and I presume they will be under this umbrella and under this legislation.Firstly if the Commerce Commission does indeed identify some false or misleading activity will those banks or the individuals involved be challenged through this legislation or the previous legislation? There are issues of timing there that I think are quite important. I think that having disclosed—perhaps at the end of this year early next year—there is the question of what process will then follow in respect of banksthat in my view have indeed engaged in false and misleading information in the sale of swap loans to a large number of farmers some small-business people and some horticulturalists across this country.I await the outcome of the Commerce Commission investigations with some enthusiasm because unless we get on top of those products and unless we pass this legislation which is indeed why Labour is supporting it we will continue to have small investors who lose their life savings and people who use financial products that are unsuitable.My question—and I go back to it for the Minister—asks why we have not perhaps improved the areas of disclosure insider trading and market manipulation. We indeed have a small country. The objective of getting I guess more trades on to the capital markets is a good idea initiated by my colleague. I do not think she intended it to go so far as the current Government has gone.