Cunliffe David: Financial Markets Conduct Bill — In CommitteeText is incorporated into the Bound VolumeCunliffe David: Financial Markets Conduct Bill — In Committee[Sitting date: 27 August 2013. Volume:693;Page:12995. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a short call in support of the Financial Markets Conduct Bill having enjoyed working with colleagues on it at the Commerce Committee. The bill is a fundamental rewrite of our securities law. It will change what the public sees about every investment that they make. The current investment statement will be replaced by a simplified and shortened product disclosure statement backed up by more extensive information which will be placed and made available on websites. It brings into the net of securities law a number of products be they housing-related schemes or schemes by the acronym of “DIMS” which I will not be spelling out in the Chamber so that previous carve-outs which allowed certain subsets of schemes to run along different standards will be brought within the general net.This is a doorstop full of paper. It is almost as big as the Income Tax Act and it is every bit as complex. This is one of those jobs where we poor mortal politicians recognise the limitations of our expertise and our reliance upon the excellent advice that we traditionally get from our professional advisers. More than that it is incumbent upon the Committee to note the broad thrust of this and to be able to deal with issues of detail as they are surfaced by the advice process.The reason we are doing this is operations like South Canterbury Finance which burnt nearly $1.5 billion of the public’s money and the Government’s money. Hanover FinanceBridgecorp Ross Asset Management Blue Chip andCynotech Holdings are all examples of companies that have—shall we say—met an unfortunate financial end and taken with them the life-savings of thousands of New Zealanders. That shall not be repeated. It is incumbent on this Committee to make sure that the laws we are working on tonight are such that they are up to the job of keeping our financial markets safe.The reason why the gentlemen and ladies in blue on the far side and the gentlemen and women in red here are joining together to pass this bill is that there is a common principle here which is that we understand that having integrity visibility and regulatory frameworks around our financial markets creates a win-win for both sides of the market. If markets are transparent if they are well regulated and if they are fair that is better not only for consumers and investors but also for business owners. The interests of capital and the interests of investors are actually aligned around good strong clear financial markets regulation. That is what this doorstop this brick of legislation that we are putting on the Table today is designed to do.It would be remiss of me however to note the passage of this bill without also noting the global financial crisis. The biggest change since the mid-1970s oil shock has been the fact that there has been a fundamental revision of the literature of economics of the public policy framework around financial markets and in particular—and it is a big part of this bill—of our attitude towards derivatives. Do you know that a dog couldhave got a home mortgage in the US 5 years ago before the global financial crisis? A family pet could get a mortgage. Do you know what—Hon Trevor Mallard: They’ve got traffic tickets in New Zealand. Bob Jones’ dog got a traffic ticket—a parking fine.Hon DAVID CUNLIFFE: That was probably because he drove him home. We have got an opportunity here to update our legislation to take account of the shifting sense of global financial markets. That is not a small change; that is a big change. They have failed investors they have failed consumers and they have failed savers. So much of what used to be taken for granted by the blue team in particular is now down the toilet. The assumption that markets work perfectly the assumption of rationality and the assumption of self-regulation have been blown out of the water by the fact that a dog could get a home mortgage in the United States.