Williams Andrew: Non-bank Deposit Takers Bill — In Committee Third ReadingText is incorporated into the Bound VolumeWilliams Andrew: Non-bank Deposit Takers Bill — In Committee Third Reading[Sitting date: 19 November 2013. Volume:695;Page:15041. Text is incorporated into the Bound Volume.]ANDREW WILLIAMS (NZ First): I take a brief call on behalf of New Zealand First on the Non-bank Deposit Takers Bill. For those out there listening to this or watching this I will give just a reminder as to what the bill actually does. The bill seeks to implement the final components of a new regulatory regime for non-bank deposit takers. These are deposit takers in the finance industry that are not banks. This incorporates the prudential requirements already imposed under Part 5D of the Reserve Bank of New Zealand Act 1989 and introduces new measures covering the licensing of non-bank deposit takers suitability assessments for directors and senior officers restrictions on changes of ownership and new powers for the Reserve Bank to detect and manage instances of distress or failure of those non-bank deposit takers.Essentially what this bill does is tighten up the areas outside of the main banking stream and brings in a lot more controls via the Reserve Bank so that we will not have a repeat of some of the perhaps cowboy activities that have occurred in the past in some of our financial institutions—or what you could call fringe financial institutions.In looking at Part 2 of the bill clause 13 “Determining applications for licence” states: “The Bank must not grant a licence to an applicant unless—(a) the Bank is satisfied that the applicant if licensed would be able to comply on an ongoing basis with this Act the regulations and the proposed conditions … (b) the Bank has received a suitability notice for each director and senior officer or proposed director and senior officer of the … Bank …”. That is most important because what it basically says is that at last full applications to the Reserve Bank will be required for these various entities. They will also have to justify who the directors are and who is controlling these entities.In terms of the appointment of the directors if a licensed non-bank deposit taker is a company building society or overseas company “(a) the governing body of the [non-bank deposit taker] must include at least 2 independent directors; and (b) the chairperson of the governing body of the [non-bank deposit taker] must not be an employee of either the licensed [non-bank deposit taker] or a related party.” An independent director cannot be an employee of either the non-bank deposit taker or a related party. An independent director cannot have more than 10 percent of the voting securities of the non-bank deposit taker or related parties and are therefore in a sensetruly independent and able to provide independent advice to that entity. In the past these lines have been a bit blurred perhaps where employees have acted in this role. Senior management has acted in this role in some cases. Often as we have seen in the case of South Canterbury Finance and other such institutions there have been instances where governance and management and other things have overlapped.It is also interesting in terms of credit ratings that a licensed non-bank deposit taker must have a current rating of its creditworthiness or as required by the regulations in clause 23 the creditworthiness of its borrowing group. Again that will be of great comfort to investors—the mums and dads of New Zealand who are perhaps putting money into such financial institutions. The non-bank deposit takers must have a current financial rating and creditworthiness to substantiate what they are doing in terms of taking the deposits.This is a further bill today following on from the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill which we had just before and following on from other financial ones last evening. It is a tranche of various bills aimed at tightening up the financial markets in New Zealand. This is another one that New Zealand First supports because we believe that there were some glaring anomalies in our financial legislation that were allowing less than satisfactory business transactions to take place and indeed putting New Zealanders at risk in the case of their investments. This is another way of tightening that up and giving more surety to the financial markets making New Zealand a much safer place in which to invest money and making it a far tidier situation for the New Zealand economy. New Zealand First will support the bill.