Clendon David: Non-bank Deposit Takers Bill — Second Reading 
Text is incorporated into the Bound Volume 
Clendon David: Non-bank Deposit Takers Bill — Second Reading 
[Sitting date: 02 August 2012. Volume:682;Page:4257. Text is incorporated into the Bound Volume.] 
DAVID CLENDON (Green) 
: 
Tena koe Mr Speaker. Kei te mihi nui ki a koutou. I am pleased to make a few comments about the Non-bank Deposit Takers Bill as it proceeds through the House in a reasonably brisk fashion I have to say which is appropriate given that the content of it is important. It seeks to plug a reasonably large and gaping hole in our regulatory and oversight legislation. This bill sets out of course to improve the level of financial oversight and prudential regulation of the rather inelegantly named non-bank deposit takers including obviously everything from credit unions through to building societies through to the many finance companies some of which have fallen into considerable disrepute in the last few years. 
The breadth of the spectrum of organisations this bill set out to cover was one of the initial barriers one of the initial concerns and I know that this was reflected in the consideration of the Finance and Expenditure Committee. Clearly organisations like credit unions are honourable institutions. They have a very long history. To my knowledge we have never had a failure of a credit union and in fact contemporary credit unions agree amongst themselves that none of them will be allowed by their peers to fail in a way that would disadvantage their investors. I think that is a very solid and good approach. Similarly many of the building societies have a good long history. So the key was to punish the wrongdoers if you like and to put barriers in place to the sort of unregulated unconstrained incompetent and often illegal activities that we saw were rife in recent years but not to impose too much compliance cost or regulation inappropriately on some of the smaller and more honourable institutions. 
I have to say that the outcome of this bill does seem to be that that quite difficult balance has been struck and I have to compliment the members of the Finance and Expenditure Committee who seem to have navigated that difficulty very well. Ideally we want sufficient regulation and we want to minimise compliance but also to ensure the integrity of these organisations. The point has been made by a couple of speakers already that we do need to give people places to invest their money other than in more bricks and mortar. We need to rebuild confidence that people can invest their money in productive enterprise using mechanisms like perhaps the new generation of finance companies. To the extent that this House can increase that level of public confidence based on genuine integrity and reliability that clearly will be a good thing. 
We know of course that the situation that occurred in the 1990s and indeed in the early 2000s was to a large extent driven by the excessive deregulation—the madness of deregulation—that was upon us in the 1980s and through into the 1990s. We hope the lesson has been learnt—we fear it has not—that sufficient regulation is necessary to the operation of a genuinely free and fair market. Excessive deregulation counts against that. Hopefully that lesson has been learnt and this bill goes some way to putting that in practice—the lessons of that time. 
There is a great deal about integrity in this bill. In the Greens we consider that in much of our legislation around business and financial practice there are still too many legal mechanisms allowing individuals to escape responsibility for their actions. We have no sense that all business failures are the result of incompetence or indeed dishonesty. Clearly things do go wrong businesses fail and companies can fail but we do feel that too often there are too many means by which people can legally avoid individual responsibility. Over time we would like to see further amendments in the broader picture to ensure that where excessive risk is evident or where individuals have not acted responsibly or with integrity there should be much more personal liability. This is partly because we think that would engender a much more thoughtful approach to doing business. 
There is an absolute responsibility. If people choose to be reckless with their own money or their own resources good luck to them but when people are managing resources on behalf of other people then that is the point at which the appropriate level of risk has to be ascertained and that liability must be sheeted home to those who have acted irresponsibly or without due regard for the well-being of the investors. 
I have made the point already that this is quite a complex piece of legislation. There are many stakeholders in this and there are many relationships between this bill and multiple other pieces of legislation each of them in its own right quite complex. I claim no expertise or experience in commercial law but even for the reasonably informed layperson it is easy to see that a bill like this could have a lot of unintended consequences. There could be fish-hooks in it that would lead to further difficulties down the track. Again I would have to say that I think the select committee has probably done a pretty fair job of navigating through that. The idea of delaying the commencement date was I understand an acknowledgment that there could otherwise be unintended consequences or consequences that were not preferred by the committee nor indeed the affected parties. 
So all in all it does seem that a useful piece of work has been done here. It by no means gets us to the end in terms of assuring people that their investments will be secured will be responsibly managed and will be surrounded by integrity and a reasonable degree of individual responsibility and liability when things go wrong but it is a good step in the right direction. For those reasons the Greens will be happy to continue to support this bill. Kia ora.