Clendon David: Financial Advisers Amendment Bill (No 2) Financial Service Providers (Registration and Dispute Resolution) Amendment Bill — Third Readings 
Text is incorporated into the Bound Volume 
Clendon David: Financial Advisers Amendment Bill (No 2) Financial Service Providers (Registration and Dispute Resolution) Amendment Bill — Third Readings 
[Sitting date: 22 June 2010. Volume:664;Page:11987. Text is incorporated into the Bound Volume.] 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. Comments have already been made this morning that these bills indicate the value of regulation and there was reference made to the fact that the financial advice sector is an industry that was under-regulated. Unfortunately we cannot rely on the goodwill or integrity of a minority of those within the industry and it is necessary to apply some regulation. The market left to its own devices clearly will not protect the well-being or serve the interests of all players in that market; it never has and a completely unregulated market never will. There is simply too much at stake here. We are talking about people who may well be investing all of their life savings or the assets they have managed to accumulate over many years of work and effort and we have a responsibility as legislators to ensure we put the best possible policy settings in place to ensure those people some reasonable protection—again notwithstanding the fact that investment always carries a measure of risk. In order to asses risk intelligently and accurately one needs access to information honest and open disclosure and a high level of transparency about exactly what it is one is investing in. Clearly that was not the case with many of the companies that have now failed and that have left a great deal of not only financial or economic loss but also significant human cost in their wake. That includes ill health the break-up of relationships and even at the extreme end the suicides of people who have lost everything they had and could not see any way forward other than that very unfortunate and tragic end. 
It is appropriate and a good thing that these bills have come to the House and are passing through it. I think it is important to acknowledge that this legislation on its own will not solve all of the problems that can be associated with the industry. There are other issues. One of those is that we—like many on the committee and outside it—have not found it entirely straightforward to penetrate some of the language that is commonplace to the financial sector. It is important that we continue the constant drive to get plain English documents. When people are confronted with legalese or jargon they are at a disadvantage. There was mention this morning of an asymmetry of information understanding and knowledge. Clear plain English documents would be a significant step towards ensuring that people are well informed and that they can make reasonable assessments of the risk of the investment they are proposing to make. 
There was some significant discussion through the select committee process about the value or the integrity of self-certification programmes. I think there is certainly a place for that for people who might otherwise be in a grey area when it is not clear whether they could be reasonably expected to take care of themselves in that place. On the flip side of that international experience shows that some self-certification programmes have been abused and misused and have left people vulnerable. The resolution of that debate was to put a significant onus of responsibility on whoever accepts a statement of certification. If I make a claim that I am able to look after myself then the person accepting that claim needs to have reasonable cause to make a fair and reasoned judgment that I am in that position. I think that was a good example of a negotiated outcome for some of what could have been sticking points within this quite substantive and complex legislation. 
It is interesting to see that just a day or so ago Mark Weldon the chair of NZX made a call for local initiative local institutions and local policies that will reduce this country’s reliance on foreign capital. Indeed putting this bill in place and giving people more confidence that they will receive fair honest and open advice is one step albeit a small step towards us becoming somewhat more self-sufficient in capital. It gives people confidence to invest their hard-earned money. It will also have a positive spin-off as I mentioned earlier in potentially making more capital available to business people and innovators who want to build and develop a local industry in whatever the context might be. 
I think there is more work to be done around financial investment more generally. We need to create policy settings that encourage and improve the landscape for so-called angel investors those people who have funds and are willing to put them into sometimes unproven investments—people who offer venture capital on reasonable terms. Clearly in the New Zealand market place that is a gap that needs filling. We have too little access for many in our creative design sector our innovators who can actually build a sustainable economy in New Zealand. By facilitating the entry into the market of angel investors we would go a long way to resolving that. 
We in the Greens believe there is a significant opening to create policy settings for ethical investment companies the likes of Prometheus Finance which is probably the best known in New Zealand. Those are companies that will guarantee and undertake to their investors that they will invest only in products and services that are deemed ethical. There are obvious things like tobacco arms and various forms of nuclear energy but they actively pursue ethical sustainable investment. Having evened the playing field a bit which we have done with this bill the next steps might be towards facilitating the growth and expansion of that ethical investment community. The Government investing more and putting some of its own funds into these programmes and actively pursuing and supporting these programmes would send a very good signal to the market that this is the way forward. Investing in ethical companies investing in sustainable development and investing in local industry innovation initiatives is definitely the way to forward for this country its economy and indeed the people living within it. 
Finally I simply reiterate what has been said. This has been a very positive process in negotiating a good outcome for these bills despite some initial differences based on ideology or experience or whatever it might be. It has been a very positive process and it has taken us a step closer to assuring New Zealand investors that they can have a degree of confidence and safety in their investments. Kia ora koutou.