Smith StuartFRIENDLY SOCIETIES AND CREDIT UNIONS (REGULATORY IMPROVEMENTS) AMENDMENT BILLIn CommitteePart 1 Amendments to principal ActSTUART SMITH (National—Kaikōura): This bill is about reforming the Friendly Societies and Credit Unions Act of 1982. Friendly societies were formed some years ago and continue to be formed under the premise of helping out their members in times of sickness and widowhood and they are funded by voluntary subscriptions and/or donations. On the other hand credit unions are financial cooperatives that have been set up to encourage savings thrift and financial education and to enhance the social and economic well-being of their members and society as a whole. Any surpluses that are generated by credit unions are reinvested for the benefit of the members. There are currently 13 credit unions in New Zealand with 190000 members. They have deposits to the value of $1.7 billion and a transactional value per annum of around $10 billion.This bill is a continuation of the good work started by the National Government under John Key and Bill English when they faced the global financial crisis in 2008 and the fallout from that including South Canterbury Finance and other finance companies' failures and other issues in the finance sector. The reforms were set out in a broad suite of reforms to simplify legislation and to ensure that consumers were at the heart of that legislation. For example the Credit Contracts and Consumer Finance Amendment Act of 2014 was followed by the Credit Contract and Consumer Finance Regulations of 2015—and prior to that the Financial Markets Authority Act of 2011. So the consumer was put at the heart of that legislation to ensure that they understood the risks that were involved and their obligations.This current bill is in line with the World Council of Credit Unions model law and in fact the world credit unions' association points out that New Zealand is an outlier when it's compared to the other countries that are involved—particularly Canada and the UK—by not having incorporated credit unions and friendly societies. The credit unions in Australia in particular were often raised by submitters at the select committee stage where they were able to incorporate—in fact had to incorporate under the companies Act—and were able to demutualise. That is not possible under this bill so that allays a lot of the fears raised by some of the submitters.The key broader changes are that the bill aims to remove unnecessary operating and compliance costs promotes greater efficiency and accountability brings credit unions into line with other financial services providers in New Zealand seeks to maintain the element of mutuality and common bond between members and modernises and updates the Act to ensure that it is refreshed and suitable for modern-day credit unions. The specific changes in the Act—a little bit more specifically—simplify the statutory objects of an association of credit unions to cover the conduct of the activities for the benefit of its members. It provides for the incorporation of credit unions as I mentioned. It allows credit unions to be bodies corporate and to have what is known as the powers of a natural person. This takes place under the Friendly Societies and Credit Unions Act rather than under the Companies Act as I mentioned earlier. It introduces certain measures to reduce the minimum number of credit unions required for an association which is in line with the changing face of the credit unions as they amalgamate and we have less of them. And it allows friendly societies to offer securities. Friendly societies particularly around insurance have been constrained by their ability to raise capital and to provide other services that their members require and so this bill will allow that. Thank you Madam Chair.