Lee Melissa: Financial Service Providers (Pre-Implementation Adjustments) Bill — First Reading 
Lee Melissa: Financial Service Providers (Pre-Implementation Adjustments) Bill — First Reading 
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MELISSA LEE (National) 
: 
 It is a pleasure to rise in support of this Financial Service Providers (Pre-Implementation Adjustments) Bill—what a mouthful! I take this opportunity to wish everybody in the House and also people listening at home and watching television through Parliament TV a wonderful New Year—the Year of the Tiger. In my language it is “Se hae bok mani baduseyo.” which means: “May you receive lots and lots of blessing in the New Year.” And to the previous speaker who has just taken his seat Mr Raymond Huo I say xin nian kuai le which means happy New Year in Chinese I believe.  
The purpose of this bill is to simplify the implementation of the Financial Advisers Act to reduce costs and to encourage public confidence in the industry. Both of those things I am sure everyone in this Chamber would agree are good and need to be done to promote confidence in the financial sector. It is wonderful to see everybody across the whole Chamber in support of this bill. We all know someone who has suffered through the collapse of finance companies. I know more than one who has lost all of their retirement savings in their twilight years. The large numbers of finance company failures affected me personally. I panicked and cashed in even my son’s education fund thinking that I was going to lose all of that money. I put it under my bed like a not-so-very-sophisticated investor would do— 
Dr Paul Hutchison 
: Is it still there? 
MELISSA LEE 
: No it is not actually. It is not still there; it stayed there for a couple of days and I decided that perhaps the best thing I could do was put it in the bank in a high-interest-earning savings account. 
The bill makes technical amendments to the Financial Service Providers (Registration and Dispute Resolution) Act and the Financial Advisers Act. It was introduced into Parliament by the Minister of Commerce the Hon Simon Power. Let me take this opportunity to say what a great Minister he is. The number of bills he put through this Parliament last year was nothing but phenomenal. 
Hone Harawira 
: Phenomenal! 
MELISSA LEE 
: Sorry? 
Hone Harawira 
: Phenomenal! 
MELISSA LEE 
: Fantastic phenomenal; that is right. The Minister expects the changes to take effect in the middle of this year giving financial advisers about 6 months to implement them before legislation is made compulsory at the end of the year. The amendments to the bill focus mainly on changes to qualifying financial entities; as Katrina Shanks said people in the industry call it the “QFE” model. Although I am not from the financial sector I am starting to get the hang of that—“QFE”. A qualifying financial entity is a company given the thumbs up by the Securities Commission to take responsibility for the advice provided by its employees and contractors on a limited range of products instead of having all those people each requiring their own licences. This means that a qualifying financial entity has to name individual contractors whose advice it will take responsibility for. That means both qualifying financial entities’ employees and named contractors can provide financial services on category 1 products like shares without individually having to be licensed. At the moment only employees of qualifying financial entities can do that. 
The bill brings transparency and clarity into the sector as qualifying financial entities are not automatically responsible for advice from all of their contractors but are for those they name as contractors employees and the products they advise on. The changes also permit those employees and named contractors to provide financial advice or services for products for which the qualifying financial entity is a promoter under the Securities Act—not just the issuer of the product. At the moment that is allowed only if the qualifying financial entity is the issuer of the product and not the promoter. We need competent and ethical individuals to deliver professional financial advice as the Minister said and as other members in the House agreed. I look forward to the submissions through the select committee stage from both financial advisers and consumers to make sure we have a robust process in progressing this bill. 
I take the opportunity to give you an example of the climate of the industry. I will share a story if I may. There was a  
Consumer 
 magazine mystery shopper investigation into the industry last year. It was interesting to note that among other things out of seven pre-retirement plans investigated six provided little practical help and were found to have lacked meaningful advice. That is appalling. That is an 85 percent failure rate in my view. Only one Trustees Executors had a detailed plan and gave good reasons for the advice given. That was the only plan rated as “good” by the mystery shopper panel. The magazine article identified disclosure competency and independence as three areas where there were shortcomings in the industry. This bill and the new financial regime this Government is implementing will go a long way towards addressing those shortcomings. This bill simplifies the implementation of the Financial Advisers Act and reduces the cost while encouraging public confidence in the industry. It will provide transparency clarity and certainty and for me that is fantastic. I commend this bill to the House.