Lotu-Iiga Sam: Financial Service Providers (Pre-Implementation Adjustments) Bill — Second Reading In Committee 
Text is incorporated into the Bound Volume 
Lotu-Iiga Sam: Financial Service Providers (Pre-Implementation Adjustments) Bill — Second Reading In Committee 
[Sitting date: 22 June 2010. Volume:664;Page:11960. Text is incorporated into the Bound Volume.] 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I rise to say a few quick words on the Financial Service Providers (Pre-Implementation Adjustments) Bill and I also echo the comments of the chair of the Commerce Committee to our officials and our advisers. I acknowledge personally the staff of the Parliamentary Counsel Office while they are in the Chamber for the hard work that they did within quite tight time constraints. We thank them salute them and wish them well because a lot of legislation is coming through in this area and they will have to deal with it in future. 
This bill has multiparty support so it has not been contentious. But we have had to work on the detail of the provisions of the bill. We have all discussed the balancing act between protecting vulnerable investors as well as trying not to over-regulate. We heard an earlier speaker talk about under-regulation but we were also careful not to over-regulate in circumstances where regulation would serve no purpose and be imposed on those who do not provide financial advice. 
I have already mentioned in a prior speech on this bill that it is difficult to regulate risk. That is not the role of the Government but it has been quite clear in the last 24 hours in the settlement between the Commerce Commission and ING (NZ) and ANZ that when risk is misrepresented mispriced and inappropriately shown to be something that it is not and when that advice is conveyed by financial advisers or so-called experts we have problems. It is not the role of the Government to regulate risk; risk will always occur. It is just the same as the situation with regard to murder and other such social crimes where the fact that we have laws to regulate those crimes does not stop them from occurring. So we have to be clear that we are here to provide some guidance assurance and confidence to the public who invest their savings in financial companies or other investment products. 
The other issue that has been raised in earlier speeches is one of enforcement. There are moves as many people will know towards having a super-regulator. It is important that the super-regulator has the powers and resources needed to enforce the laws that this Parliament has passed. That is particularly important and we have seen in the last two Budget appropriations more resources being committed to the Securities Commission and other such regulators. I think that all parties support that. The proposed move involves the bringing together in a super-regulator of the different enforcement agencies so that they are not talking above or below one another but are talking to one another within the same body. 
The Hon Clayton Cosgrove also mentioned financial literacy and that is a really key point. When I do my electorate clinics I see some of the issues problems and major difficulties that people seem to have regarding investments housing and the like. Their difficulties are around budgeting financial literacy and understanding where their money goes. We cannot do enough of that type of education and that type of learning not just around basic budgeting but also around financial products. And the issue is not just about disclosure. Another member has already talked about providing for better disclosure but I know people with financial backgrounds who work in the financial industry but who still struggle to get through a 75-page prospectus. I know we have looked at legislation that has simplified prospectuses and simplified disclosure documents but nevertheless it is really asking a bit much to expect ma and pa investors and grandma and grandpa investors to understand complex financial products and financial disclosure documents. 
I want to quickly talk about the process taken with regard to the bill. I thought that the process that we worked through in the committee on this bill was although time-constrained useful and collaborative both across the House and with the industries that made submissions and came to the committee. It was quite useful to have the finance industry and the major players within that industry make contributions as we developed the bill. When we were developing the bill sometimes the disconnection between what we were doing as parliamentarians and the advisers and the industry was such that I kept questioning how measures would work in reality because we did not want to overburden the finance companies and those who work in the industry. The issues were about meeting time frames and about the costs that would be imposed. I think that the credit unions said paying $20000 would be too onerous and there was no ability within their cost structures to pay that for something on which they were not providing financial advice. We asked whether these measures were necessary in the greater scheme of things and we kept asking ourselves that as we worked through this bill. 
I think what we have come to in this bill is very good in terms of carving out the firms that did not need to come under the auspice of this regime but also including those that needed to be regulated because of the history of bad financial advice getting out into the community. I think this bill is very good. However if people out there think that this bill will solve all our problems I would say no. I say that respectfully and I say that truthfully because I know that the finance industry is developing and over time different products will come into being. There are very complex derivative products that may need further regulation. There are further exemption-making powers within this bill and that will certainly allow for the legislation to grow organically over time. I think we have done a really good piece of work. I commend particularly the committee’s chair Lianne Dalziel. I thought she worked particularly hard and guided the committee in the right direction. I certainly commend this bill.