Leary IngridFINANCIAL MARKETS (CONDUCT OF INSTITUTIONS) AMENDMENT BILLSecond ReadingDebate resumed from 11 May.INGRID LEARY (Labour—Taieri): Thank you Mr Speaker. I would just like to shout out to all the hard-working nurses in the Taieri electorate on this International Nurses Day. In June 2021 a financial institution called Credicare service announced it was closing and it left 2300 people out of pocket including many senior citizens in my own electorate and people like Wayne White of Dunedin who had paid into this fund for decades some of them for 25 years hundreds if not thousands of dollars. Those who were over 73 years old were offered a closure gift of $50 which they found difficult to understand and they basically walked away empty handed. This financial institution was about funeral costs. It was these seniors trying to do the right thing by not lassoing their families with the expense of funerals should they die and the idea was that everybody would chip in and that when somebody passed away they would have their funeral costs covered to the tune of $10000. The problem is that as that cohort aged and fewer and fewer people opted in and more and more people died the fund basically ran out of money.That is exactly the type of situation that the legislation before us is seeking to remedy. There's another case of a woman who paid $19000 in insurance premiums for a policy that was worth only $10000. Consumer magazine called that type of cover over-hyped and over-sold. I'd like to acknowledge Consumer magazine for the advocacy it's done to restore the fairness around funeral and other insurance schemes. The Otago Daily Times has also done an editorial saying that the law before us today the bill we're debating now is long overdue. I hope the Otago Daily Times will continue its excellent coverage of this issue and also alert its readers to the fact that we are now remedying this and that is what we're doing here today.The Financial Markets (Conduct of Institutions) Amendment Bill refers to the conduct of financial institutions so this is really about changing behaviours changing the culture of those institutions and putting people before profit which is a core Labour value. So it's seeking to address the question of how we get a culture of valuing people into our financial structures and it's very much about fairness. It sits very nicely with the response of this Government to COVID where we have sought to get fairness for people. You've seen that our unemployment rate is at the lowest for many many years at 3.2 percent. We have targeted our pay rates and living standards for the lowest-paid workers. We have fair pay agreements coming in. We're steering away from austerity. We've got a wellbeing focus and we've got many other things to show that this Government puts fairness at the heart of its policies and we will see that again in the impending Budget.Actually the legislation is also about financial stability. When we have systems that are robust and transparent and are fair we also contribute to the overall financial stability and that Mr Speaker as you well know leads to a more robust and more stable economy which is more attractive to foreign investment and is able to withstand the types of shocks that we've seen.The legislation also builds on the work done in the Fair Trading Act 1986 the Consumer Guarantees Act 1993 and the Credit Contracts and Consumer Finance Act 2003. So the problem that the bill tries to remedy is the imbalance of power in the financial markets and the role of consumers in that. It specifically looks at insurance and the questionable motives of salespeople who are perhaps seeking a win from a sale rather than looking at a win-win and it's also looking at the conduct controls and systems that protect consumers and the lack of accountability especially at senior level.Various banking inquiries have identified gaps in the conduct around markets gaps around fairness and weaknesses—that's inquiries by the Reserve Bank and the Financial Markets Authority—and there have been several sector reviews which have shown evidence of poor conduct. So as I mentioned before we're really looking to try and change the culture around these financial institutions to make sure that consumers are taken care of that there's a rebalancing of the playing field and that everybody entering it knows that it is fair. The UK financial services did a lot of mahi into what that culture could look like and the New Zealand officials have looked closely at that research. The UK says that consumers need to feel confident that they're treated fairly that they have needs-responsive products that there is clear communication that they can understand that the advice that they're given is appropriate that products meet their expectations and that there are no unreasonable post-sales barriers. So what the bill does is it ensures that banks and insurance companies are licensed by the Financial Markets Authority and it also seeks to reduce harm to customers by making sure there's fair treatment and that means including due regard for their interests plus intermediaries. It establishes and maintains a fair conduct programme and it requires compliance with it and it creates a regulatory power to stop volume and value targets or soft commissions. This is a case where somebody is told that if they can get a 10th consumer over the line to buy a particular product such as insurance they may say win a trip overseas. So the incentive on the intermediary or on the salesperson is about getting that sale at all costs rather than considering what is a win-win outcome. The select committee received 59 submissions. Most of them were favourable and the main highlights from the process were really adding a minimum requirement of fair conduct so that there would be certainty and also limiting the definition of fairness so that it was a non-exhaustive list. One of the big areas that came up with intermediaries—and we've seen this around employment law where there are grey areas of whether people are employees of a company or a firm or whether they're subcontractors. The legislation tidies this up and basically requires all intermediaries to be treated as though they were employees of the company for the purposes of making sales. So that means that the firms have an onus to do criminal record checks on their intermediaries they explicitly set out the expectations of good conduct they have robust policies and processes for dealing with misconduct and they monitor the outcome for consumers. Also they encourage the disclosure of commission to consumers so that they can mitigate risk so that means that intermediaries need to be transparent about any commissions that are coming their way. What this legislation does is it sits in a very complementary way with other regimes which protect consumers. It sits under the umbrella financial and credit contracts legislation. There are compliance overlaps with other legislation which are complementary. They are acceptable and they don't cause confusion. There is a statutory review clause which will pre-emptively deal with any unforeseen issues—for example if there are regulations which may overlap—and it really does complement other regimes. The scope of the legislation is around banks and insurance. KiwiSaver providers and finance companies have not been included. However there is room to do that. The Minister has acted swiftly. He's seen the mischief in the market and has moved to rebalance things for consumers and once this legislation is passed we could expect that there will be a review into other institutions which should be captured by legislation like this. Really what we are debating today is a bill that looks to increase fairness and achieve a culture of fairness in the financial institutions. It's about re-levelling the David and Goliath relationship that consumers sometimes have with large firms and organisations but also it's about ensuring the integrity and financial stability of the banking structures so that we have an economy that can withstand the types of shocks that we have seen very recently. So it's a great piece of legislation. It's been a long time coming getting to this second reading. I don't know how many times we have prepared to stand and speak to it so it feels very good to be doing this on International Nurses Day and I commend this bill to the House.