Parker David: Non-bank Deposit Takers Bill — In Committee Third ReadingText is incorporated into the Bound VolumeParker David: Non-bank Deposit Takers Bill — In Committee Third Reading[Sitting date: 19 November 2013. Volume:695;Page:15036. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Deputy Leader—Labour): I rise to take a call on behalf of the Labour Party to support the Non-bank Deposit Takers Bill. Can I thank the Associate Minister of Finance Jonathan Coleman for his contribution and acknowledge the work done at the Finance and Expenditure Committee and by officials. I add my thanks and respect for the work done by the officials. I believe that this is a good bill. It is important that the non-bank deposit takers be appropriately regulated. It is one of the lessons that we have had following the global financial crisis—that there is a need to properly regulate the financial sector so as to protect members of the public from inappropriate risk. You cannot eliminate all risk but you can properly regulate to stop some risks from being hidden.The bill defines “non-bank deposit taker” as being an entity that “offers debt securities to the public of New Zealand;” and then on-lends them. That second part of the test is necessary because if for example you are another company that offers just debt securities to the public—if you are a company that is not in the business of on-lending and the retail provision of money—then you ought not to be subject to the same regulatory regime.One of the improvements that has been made is providing a good definition of what “related party” means. That is important when trustees have day-to-day oversight of debt securities—that is when someone invests in a debt security in a deposit there is generally a trust deed that governs the terms upon which their deposit is to be held. The terms are generally overseen by a trustee which is often something like Trustees Executors or AMP—one of those trustee security companies oversees it. Their duties include making sure that the trust deed provisions that are intended to govern how themoney is held and what sorts of assets it can be invested in are conformed with by the entity that is taking the money from the public. Too often of course in recent years they were actually taking the money from the public and not giving it back. One of the reasons why that came to pass was that there was inadequate regulation of related party transactions where those that were in control of some of these non-bank deposit takers were effectively using the money to lend to risky ventures that they or a related party had an interest in and that went belly-up. The directors of the issuer of the debt securities did not have their own names on the guarantees and they managed to lose the money of the depositors and not face personal liability in respect of some of the losses that occurred to depositors. So tightening up regulation around related parties is a desirable thing to do so that there is less ability to do that in the future and so that it is less easy for people to pursue their private interests to defeat the interests of the people who have lent money through debt securities to non-bank deposit takers. I will not take any further time of the House other than to endorse the Associate Minister’s comments. Thank you.