Lotu-Iiga Sam: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third ReadingsText is incorporated into the Bound VolumeLotu-Iiga Sam: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:13007. Text is incorporated into the Bound Volume.]Peseta SAM LOTU-IIGA (National—Maungakiekie): It is a pleasure to speak on this legislation the Financial Markets Conduct Bill and the Financial Markets (Repeals and Amendments) Bill. As has already been stated tonight this is a significant step forward in terms of our securities markets. I want to thank the Minister of Commerce the Hon Craig Foss for getting it through the House tonight and also the chair of the Commerce Committee Jonathan Young and members from the National side Kanwaljit Bakshi Jian Yang and Mr Mark Mitchell who joined me and other members who deliberated on this bill. I also want to thank the Capital Market Development Taskforce because it did some great research on this area as did former Minister of Commerce the Hon Lianne Dalziel. I wish her well in her mayoral campaign and I just want to acknowledge her work on this legislation too.This legislation is important because capital markets legislation especially capital markets and securities legislation needs updating. It is 35 years since the legislation was first passed. Since then not only have the ways of raising capital changed across the board basically from phone to more electronic forms but also the products that are available for transacting in our capital markets have changed where we have various derivative products the number of market participants in our country has developedand now capital flows in and out of the country in terms of our capital markets. We need reforming of that legislation.This legislation actually adds to what has already been done under this Government. The Financial Markets Authority Act brought together a single entity to oversee the transactions in our markets. That was one of the recommendations of the Capital Market Development Taskforce and we took that on board. The Financial Service Providers (Registration and Dispute Resolution) Amendment Act and the Financial Advisers Amendment Act we enacted 2 years ago and again they regulate those who participate in the market who give advice and service provision in financial markets and with financial products. We again had to clean up the mess that was left by the last Labour Government in passing the Financial Advisers Act in 2008.I heard members opposite say that we are passing this under urgency. Well we are passing only the Committee stage and third reading under urgency. What members opposite do forget is that in 2008 they passed the financial advisers legislation which needed to be repealed in many ways under urgency under the Clark-Cullen Government. So I ask members to just think when they make such comments in the House and to look at their own house and get their own house in order.This legislation is about rebuilding confidence in the markets. We know that when the global financial crisis hit numbers of companies failed but those companies started failing as Mr Norman correctly said—and I do not agree with much of what Mr Norman says—under the last Labour Government. They failed in 2005 right up to 2008 and we have had to clean up the mess brought about by a lack of regulation in this area. I am glad that those members have come on board though. I am glad that they have joined us in regulating markets properly.This is about balancing between disclosure and reporting requirements under the legislation whilst also enabling our companies and organisations to get on with raising capital—both debt and equity capital—in our markets. Why? Because by gaining capital they invest in assets and resources—and Mr Jones knows this because he is in favour of these types of policies of investing in jobs in resources. They provide jobs and opportunities and that allows our families and our communities to look after themselves through job opportunities. What it does by having better trust in the markets is give investors confidence. It gives them the trust and confidence that they can with a fair degree of certainty make investments in the markets and understand what those products stand for. There is still risk and as the last Minister of Commerce stated during the legislating of other commerce bills we cannot in this Parliament regulate for risk. What we can do is provide a framework within which investment products can be better assessed for risk and better assessed for the pricing of those products.So I turn now to the Financial Markets Conduct Bill. Various parts of the bill are important and I want to touch on just two. Part 3 replaces a requirement for issuers to prepare a prospectus and investment statement with a requirement to prepare a single product disclosure statement. This is tailored to retail investors—mum and dad investors—whom we are trying to protect whom we are trying to promote. The partial floats of our State-owned enterprises promote the access and the ability of those investors to get into the market and invest in our companies.The final thing I want to just touch on is that this legislation—and Mr Norman touched on it—touches and modifies the liability framework for breaches of securities law. That is important because those who transgress our laws—and these securities laws are particularly important—have got to know that serious breaches of these laws will be enforced and criminal penalties will be imposed on those transgressors. It will be 10 years’ imprisonment and fines of up to $1 million for individuals and $5 million for companies for egregious behaviour. That is a Government that is acting on the wishes ofsubmitters that is a Government that is listening to mum and dad investors and the public and that is a Government that is promoting economic growth in our communities.Finally I say that we promote this legislation. It is a bit of a massive piece of legislation to have undertaken but we did it and it took a bit of time because consultation with the industry and consultation with the regulators the stakeholders the investors and the consumers was really important. I think given what we have gone through in the process here that we have come up with legislation that will work in future and will deliver for New Zealanders and deliver jobs opportunities and growth.