Dalziel Lianne: Financial Advisers Bill — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Dalziel Lianne: Financial Advisers Bill — Second Reading In Committee Third Reading 
[Sitting date: 23 September 2008. Volume:650;Page:18982. Text is incorporated into the Bound Volume.] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I thank the member. I think that this is an appropriate time for me to do the mea culpa. People have asked who is to blame for the quality of the original bill as introduced and I accept full responsibility for that. But there is one thing that I will say in defence of the line I took in terms of the occupational approach. 
Simon Power 
: I wasn’t blaming you. 
Hon LIANNE DALZIEL 
: Other members made certain comments so I thought I should accept responsibility. The point I want to make is simply this: if I had introduced a bill with a very narrow focus nobody who ought to have been covered by this bill would have put their hands up and said: “Excuse me you’ve left me out. Please include me.” By including everyone by having a really broad definition those who were not appropriately covered by this legislation were very quick to put their hands up and say: “Please take me out.” I still think that that was a good process in terms of getting everyone’s attention focused on who should be covered by the legislation. I do agree that shifting from the individual occupation to the type of advice they are giving based on the product and the financial services planning or the financial planning approach is absolutely the right way to go.  
I just draw the member’s attention to the Supplementary Order Paper because there are some changes here that have picked up on some of the omissions. One is in respect of registered valuation where obviously there could be potentially the giving of financial advice as a necessary incident of that work so we have included that as well. We have picked up on the issuers and trustees. 
Simon Power 
: Excluded that one as a financial adviser. 
Hon LIANNE DALZIEL 
: Excluded—excluded. We have also picked up on the question of issuers and trustees although I think that the point the member raises about the trustees the front-line supervisors is a very real one and it is part of the next stage of the Review of Financial Products and Providers which we have already announced is being held back a little while we do some further work arising very specifically out of the finance company failures of the last 2 years. There is further work to be done with regard to the front-line supervisors. We have already announced some of the original decisions that were taken but I have made the statement publicly that there is further work to be done in that area.  
In respect of the budget advisers I was very very concerned to make sure that budget advisers who help people who are struggling to cope on minimal levels of income would not be caught by the Financial Advisers Bill which is about protecting people from the risk of losing their life-savings when they have money left over to invest. I wanted that dividing line to be even clearer than as reported back from the select committee so we have actually picked up some concerns that have been raised by the citizens advice bureaus. So now the clause will exclude people giving advice or making an investment transaction in relation to a category 2 product or providing a financial planning service taking that in the broader sense if the advice is given the transaction is made or the planning service is provided without charge in the course of a service offered by a non-profit organisation. So that really should clear the decks for those people to feel comfortable that they can just get on with the job of providing that support.  
The third area I should highlight is the question of an employer providing assistance to an employee with the implementation of a decision to acquire or dispose of a financial product made available through the employee’s workplace. Not all workplace superannuation schemes will be KiwiSaver for example so I think it was important to focus more broadly on employers giving supportive information in order to assist the implementation of decisions that their employees make.  
In respect of the comment made by the member in relation to the Takeovers Code I should make the point that yes I know the language does sound difficult and we do speak of financial advisers not including independent advisers giving advice but the people who are appointed to enable people to make decisions as to whether to accept offers in a takeover situation are appointed under the Takeovers Act. Their independence is assured by that process and the question around disclosure is covered by the independence that operates under the Takeovers Act. It is all monitored by the Takeovers Panel and I think that is why it is excluded here. They do not have to go through having to disclose all of their situation under this particular legislation.  
Simon Power 
: So it’s not designed to exclude investment bankers. 
Hon LIANNE DALZIEL 
: It is not designed to exclude investment bankers but this is a particular function that they have under another Act.  
The last thing I want to comment on is the question of disclosure. I draw the member’s attention to the provisions of the bill which talk about disclosure having to be in the form required by regulation. I think that that is one area about which I want to give the member some comfort. I remember going to a meeting of financial advisers which included some of the representatives from the Australian industry. They talked about the number of pages that had been increased by the particular regulatory framework they had adopted over there. I have asked my officials to make sure that when they do this work on these regulations—and subsequently on the changes they will be making in the Securities Act area which will cover investment statements—they make them short and simple in plain English and make them very accessible to those who are seeking to rely on them. The last thing we need is to have complex difficult documents. We want people to be able to access the level of information they need.  
I think it is very important in this environment where we have advisers being paid by way of commission from the people who are selling the products that people have not only the information about the nature of that commission but also a comparator with those other commissions that might be available. Unless people know that their adviser is being paid a lot more to offer them a particular product over and above something else and all the other issues that the member raises then I think it does not address the fundamental flaw that exists in the current arrangement. This bill is designed to address that and I know that members of professional organisations now—and this is why I always recommend that people use financial advisers who are covered by professional organisations—require their members to disclose this information up front already. At this stage people do not have to wait for the legislation if they use people who are members of professional bodies.