Chhour KarenKAREN CHHOUR (ACT): Thank you Mr Speaker for the opportunity to stand and speak on the Financial Markets (Conduct of Institutions) Amendment Bill. This is an introduction of a new conduct regime. The behaviour targeted and required by this bill is laudable but misses the target. ACT has strong concerns over the scope and the application of this bill and would prefer to see a major rewrite before this has been introduced or the holes in the bill are to be addressed.The bill intends to create a broad regime governing registered institutions and the conduct of banks insurance and non-bank deposit takers. In new subpart 6A inserted by clause 9 key definitions it says that New Zealand has 27 registered banks and 86 licensed insurers and 20 non-bank deposit takers. The bill excludes the other 1450 registered financial service providers—98 percent of the industry's participants—which includes privately funded finance companies pay day advance peer-to-peer and other high-cost lenders and shopping trucks; the worst offenders in the recent years under consumer laws. This is a major flaw in the bill. It's a bill where much of the evidence of the problems is based on qualitative reports by the Financial Markets Authority (FMA) and the Reserve Bank into conduct and the culture into the banking and insurance sector plus the Ministry of Business Innovation and Employment (MBIE) report back filling the stakeholders' rationales. ACT has a concern that this is all bones and no muscle and so do others. No crisis no burning platform here; this is FMA director Mason. FMA and the Reserve Bank said that there were relatively few instances of potential misconduct. The Insurance Brokers Association said that this still results in less availability of independent financial advice in the full reveal of product and design information. The independent financial advisers said that there's no evidence presented that financial institutions are not already treating consumers fairly. The Bankers' Association raised concerns to the incentive prohibitions and settings. Bad behaviour targeted should not be fixed by regulations. Problems identified by MBIE: products are not always designed with a good customer outcome in mind poor value of products stitching and covering issues and problems in relation to sales. Free market is about greater competition and other methods than those proposed in this bill. Institutions already have policy in place and this requirement will simply impose more regulation and bureaucracy. It discriminates against mutual and credit unions. There's no more hazard in their activities targeted in this bill. Mutual and credit unions is burdensome and unnecessary and should be excluded from this bill; they're already legislated to act at all times in the best interests of their members. The ad hoc approach to the industry the framework where two years to put meat on to this and MBIE's advice two years old and another two years of workability and we still need to move on. The bill requires certain financial institutions to be licensed and to create and comply with a fair conduct programme at a cost. Clarifying what a fair conduct programme" must include by inserting further minimum requirements for this bill. Intermediaries are not included in this and do not have to comply. Ministers must have regard and powers before commencing regulations regarding incentives. "The FMA must before commencing a proceeding under subpart 3 of Part 8 for a contravention of this subpart obtain the consent of the Commerce Commission if the FMA considers that the conduct in question is likely to contravene any provision of—(a) the Credit Contracts and Consumer Finance Act 2003; …(b) the Fair Trading Act 1986. (2) However a failure to obtain consent does not affect any proceedings commenced by the FMA."We must legislate at all times in the best interest of the customers and ACT does not believe that this achieves that. So ACT will not be supporting this bill."