Chadwick Steve: Auditor Regulation and External Reporting Bill — In Committee 
Chadwick Steve: Auditor Regulation and External Reporting Bill — In Committee 
[Volume:672;Page:18302] 
Hon STEVE CHADWICK (Labour) 
: 
 I will take a call on Part 2 of the Auditor Regulation and External Reporting Bill. As we get into the nitty-gritty of debate on Part 2 about licences registration and accreditation and about the role of the Financial Markets Authority I find that the provisions in the bill are remarkably similar to initiatives that Labour began when we were in Government about professionalisation of the medical profession and then of the police. Similar models came into being and I know that the Hon Lianne Dalziel became concerned when financial market concerns for investors began that perhaps professionalism needed to be raised and the bar needed to be raised in relation to auditors. 
The bill is a good bill and we are supporting it because it is really important for investors regulators and others who participate in the financial markets to know that there is confidence in the information they are dealing with. 
I can see that in New Zealand there were indicators at the time of the first failings of companies like Blue Chip and others that started this ball rolling that some of the finance companies lacked the competence that was necessary to carry out the audits or did not have a sufficient degree of independence. Part 2 gives the degree of specificity that we need to make sure that there are ongoing competence requirements. That component of Part 2 is very good. 
There is also a right of appeal which I think is a fair provision for those who may fail to be issued a licence through the Financial Markets Authority. The prescribing of licensing and registration is incredibly important. My colleague talked about the minimum standard. I found the minimum standard in clause 25. 
One of the issues that I know the Hon Lianne Dalziel would have liked to talk about in respect of the responsibility of the Financial Markets Authority and the new board that has just been established is that it was a bit of a lost opportunity when the Minister of Commerce did not carry over some of the expertise from the initial establishment board. The board worked really hard and developed great expertise on how the Financial Markets Authority would work in respect of the provisions of Part 2 of the bill. 
Ms Dalziel noted that only one member of the establishment board has been appointed to the Financial Markets Authority board and that another has been appointed as an associate member. I think there was a bit of a failing in that process. Some of the members of the initial board may have decided they did not want to go on to the Financial Markets Authority board but so much expertise is required in a reform process. When the development of professionalism for auditors was accepted as something that had to happen it is a pity that the strategic thinking of the initial establishment board was not carried through. That is not a criticism; it is an observation. It is a pity that those people are not on the Financial Markets Authority board. 
Part 2 with all it specifies shows us that the old model of self-regulation of the industry and of accountants acting as auditors was outdated and that we had to move to the changes made by the bill. It is great that the Minister has picked up the bill. It was tabled in September and here we are in May at the Committee stage. The bill is very necessary and very much required for investor confidence in the financial markets. 
Those are the only remarks I will make about Subpart 2. The provisions follow quite a prescribed process which I have seen applied in other professional regulations. We are learning from this kind of process and we will be looking at other professional groups. I think that for real estate agents and others we looked at establishing a similar authority. The provisions are good. We may be looking at other professions and we will learn how the provisions work when they are applied in law as we move towards the bill’s enactment. Thank you.