Foss Craig: Financial Advisers Bill — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Foss Craig: Financial Advisers Bill — Second Reading In Committee Third Reading 
[Sitting date: 23 September 2008. Volume:650;Page:18986. Text is incorporated into the Bound Volume.] 
CRAIG FOSS (National—Tukituki) 
: 
 I thank the Minister of Commerce and acknowledge those points. I agree with the qualified financial entity part of this bill—Part 3. It is another part that was totally rewritten and for the better as we have all acknowledged. I have some questions though—and perhaps I need to read somewhere else—about the qualified financial entities. 
Many of the submitters particularly the larger players are already doing something along those lines anyway so the burden is not huge. They operate across many jurisdictions and therefore need to keep control and account of who is doing what everywhere. In this mobile world where one can call a local bank and end up talking to someone overseas keeping control does become tricky and the bill acknowledges that we can go only so far here in New Zealand. 
Among the three obligations and responsibilities of qualified financial entities that are mentioned in the bill—and I agree that the Securities Commission having that call is exactly right; it is the gateway of all things regulatory around financial markets along with the Reserve Bank; I think it is a good fit—is to ensure that staff are authorised. Most of them took that on board particularly the larger ones. They do not really have a problem with it because all their staff are authorised in some way shape or form in order to get into the building to use their websites or to do whatever it might be. 
They are also obliged to provide a list of names to the Securities Commission and to keep that list up to date. I would be interested to know what “up to date” means. I had a quick look at the definitions and I did not see it there. Common sense would say it meant quarterly reports or something like that but it could cross a financial year or it could be an entire cycle. What is up to date for one qualified financial entity operating here in New Zealand on its own may be different from what is up to date for a qualified financial entity that is incorporated here but is essentially overseas owned. Is there consistency of timeliness? I am sure the Securities Commission would give encouragement and guidance but perhaps it is one of those areas that the select committee could have defined a bit further. I am open to be advised that the definition is somewhere in the bill. 
My colleague Simon Power pointed out earlier that all of us here agree that the single regulator model of the Securities Commission—leaving the expertise in that place—is very good. The bill acknowledges that a Commissioner for Financial Advisers will be appointed. The commissioner will be a member of the Securities Commission and that is all very well and good. I presume that more funding will be required to enhance whatever operations it does. 
Also in this part—and I acknowledge the foresight of this provision—is alignment of the fines outlined in the Securities Act those in this bill and those in the Financial Service Providers (Registration and Dispute Resolution) Bill which I assume we will be talking about this week. There will be consistency across the sector and that takes away the ability for someone to do regulatory arbitrage to exploit one piece of legislation over another—to do fine arbitrage if one likes. In this bill as it was first drafted there was the possibility of five industry bodies and one person could have moved around the other bodies. 
National members are voting for this bill and this part. We endorse where it has got to now. We endorse the consistency of it and the recognition of where the expertise lies in this particular sector. I think it is very good. I acknowledge the qualified financial entity model and the authorisation of two tiers category 1 products and category 2 products—complex and run-of-the-mill if you like. I think it is a very good fit. Yes there may be further work to do. 
I shall talk a little about the types of institutional accreditation. There are those registered under this bill as category 1 products and category 2 products and authorised by the Securities Commission. That is nice and clean. There are bound to be some organisations that fall outside or very close to it but I am sure we will find them on the way through. Having category 2 will totally do away with all the fears of the various insurers agents and people who operate call centres for banks. Basically they are transacting run-of-the-mill business. I acknowledge the Minister in regard to where we have got to on that. On a cost and compliance issue it was a great leap forward because everyone had looked on it in horror. 
The question was put that the amendments set out on Supplementary Order Paper 253 in the name of the Hon Lianne Dalziel to Part 3 be agreed to. 
Amendments agreed to. 
Part 3 as amended agreed to.