Brown Peter: Financial Service Providers (Registration and Dispute Resolution) Bill — First Reading 
Brown Peter: Financial Service Providers (Registration and Dispute Resolution) Bill — First Reading 
[Volume:644;Page:14008] 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I will take an exceedingly short call. We are talking about an industry a segment of New Zealand society that is causing huge concern for the general public of this country—huge concern. Simon Power advised the House of the figure that investors have lost in recent times—something like $1.3 billion. Although it is something like $1.3 billion we have turned this debate into an argument over whether Clayton Cosgrove has handled the Real Estate Agents Bill as well as he should have. The National Party members should have supported the Real Estate Agents Bill and got over their problem of dealing with the Hon Clayton Cosgrove.  
But some of the goings-on in this industry have to see the light of day. Organisations—and I do not know whether I should name them—are engaging so-called independent financial advisers on a commission basis knowing that they are no longer independent. These financial advisers go out to sell the product of a particular organisation and to put it bluntly speak bullshit to the individual members of the public because they sell on the basis of maximising their commission rather than trying to get the best and safest return for the individual. 
I invite members of the House to put themselves in the position of mature adults who have just lost hundreds of thousands of dollars because that is what has happened. I know we cannot legislate against risk but we can legislate to ensure that the playing field is level that people fully understand the level of risk they are getting involved in and that the risk is minimised to the degree that they want. If people want to go for a high interest rate they must be aware that they are taking on a higher risk than if they played it safe.  
We know that many of these financial service providers invested in second-hand cars and dubious overseas land and property deals. But the average investor did not know where his or her money was going. A second-hand car loses its value the day it is driven out of the car yard. It goes down X percent. So the valuation of the asset goes down but the return that the company pays to the investor goes up. Well sooner or later the guy who pays out the 10 or 15 percent interest— 
Simon Power 
: They are trying to assist and this member has been asking questions about why it should go ahead.  
PETER BROWN 
: I did not quite catch that but I am interested. The point is that when an asset goes down and costs go up sooner or later the ends of the problem meet and something goes belly up.  
We have seen another financial service provider advertise its service by using a very very famous and well-respected rugby player on the front of its advertisements. I know people who have invested in that organisation because of that rugby player. I do not know the rugby player at all; I have never met him but I have a high regard for his past ability on the rugby field. If he wanted to give me advice on rugby I would say yes and I would bow to it. If he wanted to give me advice on farming I would respect it. But with due respect to the individual I would not respect his advice on financial matters. But that is the way financial services are being sold. Many many hundreds if not thousands of people in New Zealand thought: “This guy’s on the front; it must be good.” and now those people have lost hundreds of thousands of dollars.  
The Financial Service Providers (Registration and Dispute Resolution) Bill is essential. I will not go into the details because my honourable colleague Martin Gallagher who has just resumed his seat has outlined what the bill is all about as have previous speakers. I just say that we have to take this issue much more seriously than we appear to be doing tonight. I know that we will knock off early when we finish this bill but this is really key stuff for the average New Zealander.  
Simon Power 
: The big one next time—the Financial Advisers Bill; it’s the biggest.  
PETER BROWN 
: Yes the Financial Advisers Bill has to be coupled with the Financial Service Providers (Registration and Dispute Resolution) Bill and we have got to get it right. We know we cannot eliminate the risk and we have to tell the public that that cannot happen but we have to minimise the risk. We have to make it so transparent that when the public make a decision they know what that decision is all about what the risks are and what could eventuate.  
I am tired and I guess that everybody is tired so I will take my seat. Thank you.