Shanks Katrina: Financial Service Providers (Pre-Implementation Adjustments) Bill — First Reading 
Shanks Katrina: Financial Service Providers (Pre-Implementation Adjustments) Bill — First Reading 
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KATRINA SHANKS (National) 
: 
 It is my pleasure to stand here today to support the Financial Services Providers (Pre-Implementation Adjustment) Bill because this Government is about solutions and this bill is one more example of another solution that this Government has put forward to fix a gap. The bill fixes a technical error in previous legislation and provides a solution for it; that is why it is called a pre-implementation adjustment bill. 
It is my pleasure to stand here tonight to support this bill and to support our hard-working Minister of Commerce Simon Power. He is one of the most hard-working Ministers of Commerce that we have seen in this Parliament in a long time. But at the same time I need to acknowledge Lianne Dalziel the previous Minister as she is the chair of the select committee that I sit on. I acknowledge the work that she did in the previous term towards financial services and the solutions that we are looking at right now. 
What does this bill do? It simplifies the Financial Advisers Act reduces costs and encourages public confidence. But really it is just a technical amendment bill. It focuses on a very narrow area; that is the changes to qualifying financial entities. For those of us in the sector who are chartered accountants by trade and know a bit of the jargon that is a QFE. So what is a qualifying financial entity? It is a company that is approved by the Securities Commission to take responsibility for advice that employers and contractors provide to mums and dads out there—to anybody looking to invest in a product. There had been a technical glitch in that in the bill put forward in 2008 qualifying financial entities protected only employees but we know that many industries and many companies out there employ contractors whom the bill did not cover at all. An example of a company that would be a qualifying financial entity—not that there are any at the moment because that Act has not been implemented yet—is a bank or an insurance company that has many financial advisers on site and has its own training in place. It would mean that not every adviser would have to be licensed; they would be under the umbrella of the qualifying financial entity and the qualifying financial entity would be monitored by the Securities Commission and a regulatory board as well. 
We have these changes in place to name individual contractors so that they will be covered by this umbrella to ensure that these contractors and employees under a qualifying financial entity can give advice on complex products such as shares whereas in the previous legislation they were not allowed to do that and can also provide financial services for products that they are not an issuer for. Before they could promote a product only if they were the issuer; under this legislation they are now allowed to promote any product even if they are not the issuer. 
This bill is addressing an issue of a very technical nature so I will take a very short call on this. At the end of the day this is about getting back the confidence in the market and allowing people to be able to invest with confidence and believe that the advice they are receiving from financial advisers is good advice. We know there has been a track record for a number of years now as financial advisers have not been regulated of the advice they have given not always being spot on; in fact in many cases it has practically been negligent. This bill aims to give confidence in financial service providers because there is a whole generation of investors in New Zealand the mum and dad investors who are not sophisticated investors and do not understand financial products but want a return from their money. A lot of these people are now in their late 50s 60s and 70s. They got burnt in the share market they got burnt in managed funds they got burnt with finance companies and there is not a lot now for them to invest in that they feel safe about. It is important that over a period of time we get these regulations in place so that investors are sure that the advice they are getting is good solid advice so they can have confidence to go and invest out in the market just a little more as opposed to just leaving their money in the bank and getting a smaller return because a lot less risk is attached to it. 
There is no silver bullet for getting confidence back in these markets and there is no one answer. This is one step in a number of steps one tool out of a number of tools in the tool box to ensure that confidence returns to our markets in New Zealand. Thank you. It was a pleasure to endorse this bill tonight.