Power Simon: Financial Advisers Bill — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Power Simon: Financial Advisers Bill — Second Reading In Committee Third Reading 
[Sitting date: 23 September 2008. Volume:650;Page:18980. Text is incorporated into the Bound Volume.] 
SIMON POWER (National—Rangitikei) 
: 
 This is a slightly more complex area than Part 1 and one of the most interesting measures in this part is clause 12. Clause 12 relates to when a certain person is not performing a financial adviser service when giving advice or doing a transaction. Of course my colleague Craig Foss would have noted that real estate agents are mentioned in clause 12(g). I am not sure whether that is a desirable policy outcome but I would certainly be interested in what other members think on that issue. Likewise although we are fully supportive of the legislation as members know I am not 100 percent sure that also excluding lawyers and chartered accountants is a particularly good policy initiative in the sense that in much of the work that I recall doing as a lawyer during the short time that I had in that job there was certainly a financial component to the advice that was given on a reasonably regular basis. I am sure that is equally so or more so in the case of chartered accountants although I have never been in that profession.  
One thing that is particularly interesting about clause 12 is the very important inclusion of a person providing free budgetary advice as part of a budgetary advice service offered by a non-profit organisation. As is so often the case at select committees some of the most powerful submissions that came before the Finance and Expenditure Committee were not from the big business organisations or the big unions but from the individuals who come before the committee. One particular individual whose name I am afraid escapes me came before the committee to express her concern that budgetary advice offered by citizens advice bureaus or similar sorts of budgetary services would on a reading of the bill be caught by its provisions. I think that the inclusion of clause 12(k) is an extremely important one given that we certainly do not want to put people who are giving voluntary budget advice into a difficult position when they are undertaking what is essentially an unpaid voluntary community service.  
Other people are included of course in the category of non-performance of financial advice services such as teachers lecturers journalists or State services employees who give advice in the course of working in those occupations as are a Minister of the Crown and a member of Parliament—both in the course of performing their duties in those respective roles. As I have said the list includes a lawyer a chartered accountant a tax agent a real estate agent a member of the board of a Crown entity a Crown organisation the Reserve Bank a person providing free budgetary advice and an employee giving advice to or making an investment transaction on behalf of his or her employer.  
There are some references to KiwiSaver investment transactions and the offerer or target company in the course of a takeover. That is quite an interesting little inclusion there. In particular the choice of words in clause 12(p) is I think quite odd because we are saying that a person does not perform a financial adviser service if the person is “an independent adviser giving advice in the exercise of that person’s functions under the Takeovers Code”. The use of the language in the first part of that sub-definition would make one think on first reading it that that is exactly the type of person who is supposed to be captured by this legislation. The Minister is shaking her head so no doubt we will hear from her on the issues relating to the Takeovers Code that need the provision of a special exemption.  
Then there is the case of a person giving general commentary relating to a financial market. Again that is quite an interesting little definition because we could have regular columns from financial advisers where one would write in and ask say: “Dear Mr Foss I have $10000 sitting in a bank account. What is your recommendation? Should I put it into KiwiSaver or should I use it to pay my increased ACC levies?”. In that case with regard to the response that Mr Foss gives in the media—hypothetically of course—I would need to be convinced that the definition of general commentary is enough to exclude the appropriate general comments made about the nature of some of these investment schemes. But of course if one of these commentators makes the remark in passing that today the ASB is offering 9 percent over 30 days. as opposed to the BNZ offering 8.75 percent over the same period of time and offers no specific advice in respect of those two current products on the market I ask whether that steers an investor in a particular direction by its nature or inference or whether it is general commentary thereby excluding itself from that definition. 
I suspect—and others in the National Party have said this during the second reading debate—that some areas of refinement will still be needed in this area after the election regardless of who sits next to you Mr Chairman during the Committee stage of that refinement. I wonder whether we have made that provision certain enough. I see that the officials are busy chatting about these matters and I would be interested to know exactly where we are heading with that particular point.  
It is also interesting to note— 
Mark Blumsky 
: That’s a good point. 
SIMON POWER 
: I thank Mr Blumsky. We will miss that sort of input when the member leaves! The other thing I am interested in is clause 13 “Meaning of financial advice clarified”. Interestingly in financial advice we do not include a prospectus an investment statement an authorised statement a bank disclosure statement a document or documents issued in lieu of a prospectus or investment statement or a disclosure statement. One of the things I am interested in is the role of the corporate trustee when it comes to the process for having discussions about financial advice. The Minister knows because we have shared the platform on one occasion recently at a financial advisers’ conference that I am a bit keen to look at the front-line regulator the corporate trustee and make sure that its obligations and its role as a front-line regulator are being exercised in an appropriate way to ensure that investors get the full picture. So we want to make sure that clause 13 does not let the front-line regulator off the hook and I would be interested in receiving some guidance on that.  
I will leave it there in terms of Part 2 of the bill but I am keen to make a short contribution on the remaining parts.