Bayly AndrewANDREW BAYLY (National—Port Waikato): Yes it's my duty to talk on the third reading of the Financial Markets (Conduct of Institutions) Amendment Bill at its third reading commonly referred to as the COFI bill. Unfortunately National does not support and will not be supporting this bill. This is a bill that offers a solution looking for a problem. We don't know what we're trying to solve with this bill and that is why National opposes this bill.I think it's useful to talk about the review last year that the Minister referred to which was undertaken by the Financial Markets Authority (FMA) and the Reserve Bank. I actually sat on the select committee last year—I think it was last year—when the FMA and the Reserve Bank fronted up to the Finance and Expenditure Committee and talked about their big review that they've undertaken into the insurance and the banking sector. The broad conclusion was We've found no systemic issues."—right? That was the clear takeaway. But what happened—what happened? There were some examples. I was trying to talk about this last night with Mr Todd McClay my good colleague here and thinking how many banking and insurance transactions take place in New Zealand every year. I thought he said 4 billion last night but I'm not sure. There must be billions of transactions that take place and sometimes people make some mistakes.I'll tell you who also makes mistakes: the Labour Party make mistakes. The Government makes mistakes and sometimes they have to fix up legislation particularly things like the Credit Contracts and Consumer Finance Act (CCCFA) amendments which have caused such devastating impact on the financial sector. Hon Dr David Clark: Point of order Madam Speaker. Just seeking some guidance. The member is referring to a bill we're not debating which his party voted for and yet he is arguing now it was somehow a mistake. I wonder how he is allowed to continue to debate about a bill that's not even in the House that his party voted for. ASSISTANT SPEAKER (Hon Jenny Salesa): I will ask the member to continue his speech and can I remind members that it is up to the Chair to decide whether or not a debate is actually relevant. But do come back to the bill please Andrew Bayly.ANDREW BAYLY: Just to respond to the Minister's untimely and inappropriate interjection as he knows under the Standing Orders. The CCCFA bill is very very related to this and I will be talking about it extensively in a moment. But this bill creates a raft of new compliance on banks and insurance companies and the issue is it talks about codes of compliance and it talks about codes of responsibility. The issue and the reason why I was talking about the infamous CCCFA is that this Minister because he's so keen to introduce some legislation and unfortunately doesn't have a good enough grasp of the financial sector what has happened now is that if we talk about the group that is captured by this called regulated financial institutions—and just to educate members on the other side that includes banks non-bank deposit takers and also in the case of this bill it includes insurance companies. What it means under the CCCFA is that they have to prepare a code of conduct and of course that is being administered by the Ministry of Business Innovation and Employment (MBIE) and then we had the Commerce Commission last year scaring the bejesus out of directors and banks and insurance companies by wandering around saying "If you do not comply with this you will know that as a company you'll be fined $6 million and then as a director you're up for hundreds of thousands in penalties." So that's why we've stultified between 6 and 10 percent of loans that otherwise would have been approved last year up to 1 December which are no longer being approved. What this bill does is it creates another responsibility another code and this time is it going to be overseen by MBIE or the Commerce Commission? No—no. It's going to be overseen by the FMA.So here we are. I'm a director of a small bank—maybe Kiwibank right—so who am I responsible to? Well first of all I've got the Reserve Bank breathing down my neck—and by the way most appropriately—to make sure I'm doing appropriate lending and all my prudential stuff and all that sort of stuff and I've got all that compliance to do—good stuff. Then I've got this infamous CCCFA bill and the new code so I've had to prepare that. I'm in the process of preparing that about how I'm going to act as a bank or insurance company—how I'm going to act—and then I've going to make sure that MBIE and the Commerce Commission are happy with it. Then—oh just a couple of months later—well now I've got to do another code. I can't take the same code; I've got to create a new one and walk on down to the FMA and say "Here's my new code. Is it OK?" Now you tell me who's got ultimate responsibility between MBIE and the Commerce Commission and the FMA under this bill? No one can say that. What this Minister is doing is crippling the financial sector. We believe that banks and insurance companies should operate appropriately and if they don't they should be subject to all the changes and all the duties and responsibilities and the penalties and a lot of those are already covered. They're already provided for—they're already provided for. There are lots of fees and issues and compliance requirements but this another layer put on top of those and if you are a director or even if you're an executive—if you're a CEO of a bank or in the senior management team—guess what! "Mr Stuart Smith you're the HR person today. Can you go out and hire a whole lot more people? Oh no you can't because we haven't got anyone to employ in New Zealand and we can't bring in immigrants from overseas." Well maybe you could leave your job and go and get this because I'm sure he'd be well paid. You would be spending all day long doing compliance.Why can't we just let the regulations that exist at the moment—there is no problem. There is no systemic issue. Why can't you just look at those? If you want to beef them up that's fine. What the Minister could have done if he'd been challenging of his officials was he might have said "Well OK what are the options other than passing this new bill? What are the options officials?" and they could have said "Yes improve the CCCFA. Let's just tweak it a little bit more. Maybe there's an area that we need to make sure in the code that covers this new bit." The Minister might have said "Hmm that's a pretty good idea. I quite like that." The other thing that the officials could have said is "Why don't we beef up the Banking Ombudsman's role? Why don't we give her some more responsibility more funding and more powers?" That's obvious—she's already in place. Why not? But what did the Labour Government come up with and what did this Minister come up with who is just so desperate to put through legislation through this House? A brand new bill that will cost millions—millions—and guess who's going to bear the brunt of that!Hon Todd McClay: Who's that?ANDREW BAYLY: I'll tell you. It's going to be the first-time buyers the ones who can't get a loan—and they're not going to bear it are they? That means all the other mortgage holders they're all going to bear this because unless the Government is prepared to pick up the tab what do you think that organisation is going to do? What are the insurers going to do—what are they going to do? All the international insurers in New Zealand what are they going to do? Are they going to do New Zealand a favour and say "We'll bear that cost. We'll bear that additional cost because we like what Labour's doing to us."? I'll tell you what: I think they might put up the prices. So particularly vulnerable people on fixed incomes—guess what's going to happen to their insurance premiums? Their insurance premiums are going to go up. Now tell me how that's kind. This is a very damaging very poor piece of legislation and one of the big things we're going to have to do when we come into power—the first thing we're going to have to do is learn to support our financial sector. We're going to have to declutter this stuff so that people banks and insurance companies are accountable to make sure we've got the right framework. But what we're not going to do is overladen them with a whole lot of compliance just for the hell of it so that the Minister can put a new piece of legislation through the House and look good. It's not looking good it's a waste of time and we're going to oppose it."