Chauvel Charles: Securities Disclosure and Financial Advisers  Amendment Bill — First Reading 
Chauvel Charles: Securities Disclosure and Financial Advisers  Amendment Bill — First Reading 
[Volume:652;Page:1550] 
CHARLES CHAUVEL (Labour) 
: 
 I rise to speak in support of the Securities Disclosure and Financial Advisers Amendment Bill. I do not intend to repeat at length the reasons why Labour will be supporting this legislation. They have been very ably set out by the previous Minister of Commerce Lianne Dalziel. 
Nathan Guy 
: You support everything nowadays. 
CHARLES CHAUVEL 
: It is great to be able to support legislation that we began and that the National Government has wisely on this occasion adopted. The main proposal in the legislation is to provide for the use and regulation of simplified disclosure prospectuses by stock exchange - listed issuers that offer certain debt and security instruments. As I understand the proposal it does not reduce the information that is already required to be disclosed. Rather it removes duplication requirements for information that is already provided under the continuous disclosure regime that is now in place in our markets. It will also remove unnecessary impediments to capital raising while hopefully—if the balance in the legislation is struck right as we believe it is—not undermining investor protection which certainly we on this side of the House think is a very important part of the armoury that is required in this area. 
The proposal that is set out in the legislation comes from a set of recommendations made in an interim report issued by the Capital Market Development Taskforce at the end of last year in response to the global financial situation. I would like to pay tribute to the task force for the work it did and also to Lianne Dalziel for her foresight back in July last year in setting up the Capital Market Development Taskforce. It was clearly the right thing to do given the work that Labour had done to build up New Zealand’s capital markets for example by encouraging—at that stage—700000 people to join KiwiSaver our business tax package and the changes to the portfolio investment entity regime. All of these played a real and vital role in strengthening capital markets in New Zealand and the work of Rob Cameron and his team on the development task force particularly judging by the interim report in November 2008 took all those steps further by suggesting that a more sensible regulatory regime be put in place. My colleague Stuart Nash is going to talk at further length about the desirability of strong capital markets in New Zealand and about the credibility of the New Zealand Exchange as a result of the regulatory and other reforms put in place over the last 8 years by the Labour Government. 
The substance of the capital market development task force interim report proposal was consulted on as part of the review of financial products and providers. It was intended as I think the Minister said to be included in the current review of the Securities Act. But in that regard clearly the bill just brings forward something that one would expect to be introduced in any event later this year. 
I see that the bill also tidies up rules for exempt persons and people deemed by the Act not to be members of the public for the purposes of disclosure. Clearly that is a sensible technical amendment that ought to be supported. Anything that removes duplicating requirements in this area is to be supported. There are also minor amendments to the Financial Advisers Act—legislation that came before the Finance and Expenditure Committee in the last Parliament when I was chair of that committee and I hope I can say that it is very good legislation. 
It is useful to reflect on the much better regime that now exists in New Zealand in this area as a result of that legislation to which this bill will make a technical amendment. That is also as a result of the Financial Service Providers (Registration and Dispute Resolution) Act which for the first time has put in place a registration requirement for non-bank financial providers to tidy up what was at one stage a real Wild West situation something that really embarrassed New Zealand as far as our international reputation was concerned. 
The other important measure that was a counterpart to the Financial Advisers Act and also to the Financial Service Providers (Registration and Dispute Resolution) Act was the Reserve Bank Amendment Act—legislation that also came before the Finance and Expenditure Committee last year and that had cross-party support. The Reserve Bank Amendment Act in respect of non-bank deposit takers put in place for the first time a proper prudential supervision regime so that people who put their money in credit unions or in other non-bank entities that take money from the public can have the confidence that there is proper oversight of those entities proper oversight of their governance and proper oversight of the deposit levels they must have so that people can have real confidence that if as in many cases they are putting their life-savings with these institutions they are doing so within the framework put in place by the last Government—a much more responsible regime as far as the whole prudential oversight of the market is concerned. This legislation continues in that vein and helps to tidy up this general area of the law. 
I would like to observe that there is probably one area of the law that still needs some tidying up and that is the area of pay day lenders or loan sharks. I have said that the bill before the House will do some good tidying up in its respective area and it will also make the technical amendment that I have mentioned to the Financial Advisers Act. But the one thing that the suite of measures that I have also spoken of—the Financial Advisers Act the Financial Service Providers (Registration and Dispute Resolution) Act and the Reserve Bank Amendment Act—does not do is to regulate the activities of these pay day lenders many of whom are frankly loan sharks. Their activities are going to become of even greater concern as we head into the sort of economic climate described by Lianne Dalziel and by the previous speaker—a very difficult climate particularly for the less well-off in society. 
When those people coming into Wellington City see a sign off the Vivian Street motorway on-ramp that says: “Loans available at only 8 percent” and do not see the “per week” addendum at the bottom of the sign they probably do not realise that “only” 8 percent per week amounts to 5370 percent per annum. That is what so-called “only 8 percent” interest a week means on the sign that people see. This Parliament is one of the few in the Western World that has not yet done anything to regulate the outrageous interest rates charged by pay day lenders in suburbs like Porirua Newtown and in South Auckland. We need to rise to that challenge. 
So I am delighted to use the concluding moments of my speech today to foreshadow that I will at the next opportunity put forward in the ballot a Credit Reforms (Responsible Lending) Bill. One of the things that that legislation will do is allow for the regulation of those usurious rates of interest so that our fellow citizens will not be facing 5370 percent per annum interest charges just because they need a loan to tide them over from pay day to pay day. This legislation that I propose will also amend the Credit (Repossession) Act so that if a lender does not make a proper inquiry about the borrower’s ability to repay then in the event of a default the lender will be required to repay only the principal amount rather than an outrageous set of charges in interest. Once we get the legislation that we are now speaking about through the House it will go through along with that suite of measures that I have mentioned—the Financial Service Providers (Registration and Dispute Resolution) Act the Financial Advisers Act and the Reserve Bank Amendment Act—and we will then be able to hold our heads high and say we do not have a Wild West financial system in this country.