Power Simon: Securities Trustees and Statutory Supervisors Bill — In Committee 
Power Simon: Securities Trustees and Statutory Supervisors Bill — In Committee 
[Volume:671;Page:17711] 
Hon SIMON POWER (Minister of Commerce) 
: 
 Part 1 of the Securities Trustees and Statutory Supervisors Bill establishes the purpose of the bill which is “to protect the interests of security holders and”—as the member pointed out—“of residents of retirement villages and to enhance investor confidence in financial markets and retirement villages”. As members will be aware a little-used provision in the Standing Orders that relates to cognate bills has as we discovered some time ago in another piece of legislation enabled us to mesh this bill and the Financial Markets Authority legislation together for the purposes of their first second and third readings but alas not in the Committee stage so we are dealing with this bill separately from the other legislation at this time. But the idea behind that little-used provision is that the substantive debate about each of those bills is so inextricably linked to the other that it would waste the House’s time to deal with them separately. Those matters so overlap that it makes sense to deal with them together at their first second and third readings. However because that is not able to be the case in the Committee stage we are dealing with this bill separately now. 
There is a Supplementary Order Paper in my name that replaces references to the Securities Commission with references to the Financial Markets Authority to reflect the fact that they are being dealt with as cognate bills. It also inserts references to the KiwiSaver Act to include non-restricted schemes within the licensing regime. A non-restricted scheme is a KiwiSaver scheme whose manager is the issuer of interests in that scheme rather than the trustee. 
The background to this legislation is simple. When I first became the Minister of Commerce one of the issues I was most concerned about was how the front-line regulator had behaved—or not behaved for that matter—during the collapse of so many finance companies. I extracted the work done on trustees and custodians from the broader Securities Act review and said that I would bring it forward and deal with it ahead of that review. If it is the Committee’s wish that the bill passes through the Committee stage tonight then we will be able to do that in a prompt and efficient way. 
One of the things I asked early on of officials in respect of this particular role of the trustees though is: what if we did not have them? What if the front-line regulator role that they had played was just removed from the equation? The reliability of the front-line regulator to talk to investors about product and how it was classified and to protect—“protect” is a strong word—or oversee and supervise the investment was the relevant job of the trustees. I came close to asking that question in a legislative sense. In other words what value does it add for the investor to have the corporate trustee in the model? 
Things had to change. The passive role that the trustees had adopted up until recently was not going to satisfy me or this Government or I imagine for that matter any party in the House that they were adding value and oversight to investors’ decision-making. In fairness to the Trustee Corporations Association they came to me and said that they were prepared to change the way they did business. This bill is a result of those discussions. The Commerce Committee has looked at it carefully and I was persuaded at the last minute that it was worth keeping them and it was worth proceeding with this legislation. The select committee has done a good job of getting into the detail of those issues. But the sticky issue for the Committee and frankly for the Government as well was the issue of retirement villages. I understand that this issue causes some consternation to members of the industry but the truth is this: if a security is being issued by way of a licence or some other instrument for those living in a retirement village they deserve the same protection as those who are purchasing a plain security or a security as we know it in terms of the capital markets or for that matter private markets. If the money and the instrument are being overseen by a front-line regulator then they also deserve the protection of legislation in the context of retirement villages. The Government moved and I note that the select committee has recommended continuing the inclusion of retirement villages in this legislation. 
This funnily enough was the first step we took for investor protection. It is now inextricably linked to the Financial Markets Authority which in itself is inextricably linked to the wider Securities Act review but progress is being made and I am grateful to members of the committee for their assistance on that.