Williams Andrew: Non-bank Deposit Takers Bill — Second Reading 
Text is incorporated into the Bound Volume 
Williams Andrew: Non-bank Deposit Takers Bill — Second Reading 
[Sitting date: 02 August 2012. Volume:682;Page:4259. Text is incorporated into the Bound Volume.] 
ANDREW WILLIAMS (NZ First) 
: 
 Kia ora. I take a call on behalf of New Zealand First on the Non-bank Deposit Takers Bill 2011. Is it not a shame when there was so much loving going on in this Chamber and so much fondness and goodwill coming from the chairman of the Finance and Expenditure Committee and other members of the committee that that was all tossed out in one swift stroke of the pen by the Hon Nick Smith? But that is the case. It is unfortunate— 
Hon Clayton Cosgrove 
: He’d gone troppo though. 
ANDREW WILLIAMS 
: It is but it is quite normal for the Hon Nick Smith because there is never a lot of loving coming from the Hon Nick Smith normally. I used to find when he was the Minister of Local Government that there was no loving there at all. In fact I do not think he liked local government one little bit. He hated local government so this is just a continuation of that. 
But it was interesting. He alluded to the fact that the next Labour speaker should raise this point but I am not going to wait for the next Labour speaker to raise it; I am going to raise it myself. He did overlook the fact that during the last term of this last National Government in the last 3 years Government members sat on their hands for more than 6 months during that Crown Retail Deposit Guarantee Scheme while it was in operation. The Reserve Bank and Treasury under this Minister of Finance allowed billions of dollars of deposits to continue to be put into that Crown Retail Deposit Guarantee Scheme—billions of dollars—including South Canterbury Finance which took massive amounts of deposits during that period only to subsequently fail. It failed under this Government and members of this Government sat on their hands. For a period of 6 months there was no policing of the system there was no oversight by the Minister of the system and there was no good governance by this Government to ensure that that Crown Retail Deposit Guarantee Scheme was well and truly under control. As a result the taxpayers of New Zealand can thank this Government for losing a huge amount of additional money—there was already money being lost but additional money—that may well not have been lost had the Government been on top of the case had it been on the ball and had it actually been keeping control of the books. So it is disappointing to hear the Hon Nick Smith having a huge dig at the former Labour Government over this when in fact in more recent times—in the last 12 to 18 months—there have been some serious wrongful actions on the part of the Government in not keeping a closer look at the books. 
But I go back to the Non-bank Deposit Takers Bill. This is a good bill. As we have said in this House before New Zealand First will support good policy. This is a case of some more good policy coming out of this particular Government and we will as a result support it. We have always said we will support good policy. And why would we not when this bill legislates a bolstering of the Reserve Bank’s powers? We are in favour of that because what it allows for is for the Reserve Bank to vet the suitability of directors and senior advisers appointed or elected to any of these non-bank deposit taker organisations. Well that is a good thing. It is a good thing for the Reserve Bank to be able to vet the suitability of those directors and senior advisers. It also empowers the Reserve Bank to delicense a non-bank deposit taker in prescribed situations. Again that is a good thing. We like the idea that it can delicense them if they are not up to scratch. 
This bill also requires the consent of the Reserve Bank in order for ownership changes to be given approval where a person acquires 20 percent or more of that non-bank deposit taker’s voting securities. Again that is a good move because if you start acquiring more than 20 percent that starts becoming a significant stake in such an organisation and it should therefore have the consent of the Reserve Bank in such a situation. The bill also allows the Reserve Bank to gain more information from those very same non-bank deposit takers. Again as we have seen in the instance of South Canterbury Finance and some others had the Reserve Bank been in the position to gain more information at a much earlier stage and had it not sat around for 6 months doing nothing perhaps many of the investors in some of these organisations around New Zealand would not be in the sad situation they are in today having lost most if not all of their money in some of these organisations. 
Lastly this bill allows the Reserve Bank to remove directors in special circumstances. Well that is very good and we like the idea that directors can be removed. We like the idea that perhaps directors who have been found to be acting either incompetently or in a misleading or fraudulent manner can be removed. So that is a good thing. It is sad that so many people have had to put up with such huge losses around New Zealand while those very same organisations that have incurred those losses have had directors building mansions on Paritai Drive buying luxury launches on Auckland harbour buying overseas holiday homes in the likes of Hawaii and buying all sorts of other luxury items. These sorts of people need to be taken to task. The Reserve Bank does need to have the ability to remove such directors in special circumstances where clearly they are out of order. In the past 5 years or so there have been a lot of instances in this case. 
This bill brings New Zealand better into line in relation to our partners such as Australia and other major investment countries that we deal with and in terms of our banking system with the Australasian banks and the major banking organisations in this country. This is the non-banking sector. This is what you would call the others. But it is important to note that this legislation tidies up a lot of our financial services area and brings in a lot of controls that were not there previously. 
It is important to point out that building societies and credit unions are also exempt from this piece of proposed legislation so although people out there might perhaps think that this is taking away a huge amount of the risk we do have to bear in mind that there is still a level of risk for any investor and they still must be very very vigilant in terms of what they do and how they deposit their money in various schemes. We do still expect a great deal of caution on the part of any New Zealander and investor in any such banking scheme or any deposit scheme as we all would do with our own money. 
I would just like to close by saying that New Zealand First supports any initiatives in this area to tidy up the financial markets in this country. There have been a number of bills in this House in the last month or so in other areas of international banking law in other areas of international contract law and in areas to do with the Commerce Commission and tidying up some of these areas. Many of these are long overdue. It is sad that some of these bills have taken 2 3 or 4 years to get to this House. It is I think incumbent on the members in this House from all parties to do our very best to try to tidy up many of these grey areas and many of these loopholes to provide a much higher level of security for the people in this country who are putting money into what is often their major savings scheme or their way of saving for retirement. Therefore anything we can do in this regard is supported by New Zealand First and we support this bill.