Power Simon: Financial Service Providers (Registration and Dispute Resolution) Bill — First Reading 
Power Simon: Financial Service Providers (Registration and Dispute Resolution) Bill — First Reading 
[Volume:644;Page:14003] 
SIMON POWER (National—Rangitikei) 
: 
 We are now in the thick of urgency and the Financial Service Providers (Registration and Dispute Resolution) Bill being referred to the Finance and Expenditure Committee requires some careful attention.  
I start by complimenting the Minister of Commerce Lianne Dalziel on her handling of this particular legislation. I do that in a genuine way because when the Minister set out on this particular course of action off the back of the Government’s Review of Financial Products and Providers she did so using a level of language and rhetoric that was appropriate. She consulted widely in the industry. She kept the issue relatively low profile. She did not take the opportunity in recent months to vilify participants in the industry. She did not at any time I am aware of use the opportunity to stand on a platform and have a crack at—to use a colloquial term—the industry she was in the middle of discussions with over some of the regulatory matters before it.  
This stands in stark contrast to the way her colleague the Hon Clayton Cosgrove dealt with the real estate industry. Let that be a lesson to him. If the language and rhetoric are appropriate if the industries being dealt with are dealt with with respect if their views are listened to if they are quietly consulted and if the process is seen to be transparent and not political people get results.  
This bill comes off the back of the Government’s Review of Financial Products and Providers which was designed to promote confidence and participation in financial markets by investors and institutions and to promote a sound and efficient non-bank financial sector. Since that review process commenced in earnest we have seen a number of second-tier lenders collapse. What that has meant for some 58000 individual investments—not investors but investments—and what the loss of approximately $1.3 billion in investors’ funds has meant is that the magnifying glass has gone on to this process quite significantly. It has taken on a new level of importance in recent months.  
The Minister has been very careful when making public statements about this process. I have listened very very carefully to the language the Minister has chosen in this area. At the end of just about every press release she has issued on this matter she has been wise to state that Parliament cannot legislate against risk. Parliament cannot prevent risk. It cannot educate or inform people to the point where it ends up leaving the Government as a co-guarantor or with some type of vicarious liability because it has overstretched in informing regulating and educating the public and the public may form a view that that level of involvement by the Government has placed it in a position where it may be seen to act as some type of guarantor for these types of investments. That is not the case and should not be the case; nor should any Government or Parliament attempt to legislate for risk. However a suite of bills is currently before the House—one in particular is about to come. Amendments to the Reserve Bank of New Zealand Act the introduction of the prudential supervision regime the registration bill we are discussing today and the long-awaited Financial Advisers Bill which we may or may not see prior to Christmas form an integral part of that suite of bills.  
I think the entire House and all parties are concerned—and if they are not they should be—about the quality of advice being offered by financial service providers. This bill creates a registration system for those financial service providers that they will be required to belong to that will identify them that will allow better monitoring and evaluation and that will provide information for consumers. As the Minister said it is kind of an online one-stop shop source where information—financial statements and the like—will be readily available for those investors and others who have an interest in these matters. 
There is—and I qualify my earlier remarks by saying this—likely to be a cost for this legislation. We on the select committee will be interested to examine the costs to business for this regime where they will be passed on to and who will ultimately end up bearing the cost of this regulation. That needs to be carefully examined during the select committee process. The matter of access to consumer credit—a summit was recently chaired or held by the Hon Judith Tizard I am told—is one we may need to consider in the context of this bill. A particular consideration is whether loan sharks or their equivalent need a similar type of registration system or whether this registration system could be used as overarching legislation right across the financial provider sector. As the Minister noted in a briefing today that is a matter for the select committee to discuss. The Minister pointed out in her contribution the issue of whether a person should be placed on the register if a criminal conviction has occurred. That is slightly trickier than we first thought particularly under the Fair Trading Act and it is a matter that will require some further examination at the select committee as well.  
Although National will be supporting the first reading of this bill and will be looking to play a constructive role during the discussion of this particular suite of bills let us just say that when we get to the Financial Advisers Bill either prior to Christmas or early next year there will still be a number of unresolved issues. The Minister acknowledges that there is still work to be done but it is fair to say this: we have to start this process in earnest quickly in 2008. This is a big deal for the finance sector. This is a significant suite of legislation that the select committee will be required to deal with. National will come to the table of the select committee with an open mind to make sure that a cost-effective efficient system is put in place across these bills to ensure consumer protection without putting Governments in a difficult position and without crossing the line to pretend to legislate against risk which of course we know is inherent in any investment decision.