Financial Service Providers (Registration and Dispute Resolution) Bill — First Reading 
Financial Service Providers (Registration and Dispute Resolution) Bill — First Reading 
[Volume:644;Page:14002] 
Financial Service Providers (Registration and Dispute Resolution) Bill 
First Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Financial Service Providers (Registration and Dispute Resolution) Bill be now read a first time. 
 It is my intention that the bill will be referred to the Finance and Expenditure Committee. 
As the title indicates the bill sets up a registration system for financial service providers and establishes a requirement that they all belong to an industry-based approved dispute resolution system to improve consumer access to redress in the financial sector. It is the second bill arising from the Review of Financial Products and Providers that we have dealt with in this final sitting of the year. I am aware that such bills would normally be referred to the Commerce Committee. However the first of these bills was an amendment to the Reserve Bank of New Zealand Act and it makes sense that these other bills go to the same committee that dealt with that bill. That committee is under the very able chairmanship of my colleague Charles Chauvel. 
The new registration system will identify for the first time all entities providing financial services in the New Zealand market—in fact I find it rather extraordinary that we do not have a single register that is able to identify all such entities at this stage. This will assist all relevant regulatory authorities to both monitor and enforce the law and enable sectoral data to be collected. It will allow more effective monitoring and evaluation of financial service providers including facilitating effective coordination and information-sharing between financial sector regulatory authorities so that the requirements on firms are streamlined. The establishment of such a register will provide easy access to information about financial service providers. Having a register will enable New Zealand to meet specific anti - money-laundering obligations under the Financial Action Task Force or FATF as it is referred to—the particular recommendations that it has made—and it will ensure that the controlling owners directors and senior managers of financial service providers do not have certain criminal convictions are not bankrupt and are not the subject of a management ban under companies securities or consumer legislation. 
The bill covers a wide range of entities including banks building societies credit unions managed funds securities issuers money transfer services finance companies credit providers foreign currency exchanges and insurers. The definitions are intended to be as broad as they can possibly be. 
The register will be operated by the Companies Office. The Companies Office has been consistently assessed by the Business New Zealand - KPMG survey as the most helpful Government department in New Zealand. It provides a world-class service with efficient and user-friendly processes to help reduce compliance costs for business. This bill leverages off that expertise and capability. 
Virtually all financial service providers are companies or entities that are already required to register with or provide information to the Companies Office. Giving the Companies Office the function of registering financial service providers means that efficiencies will be gained and that compliance costs will be minimised for businesses which will have to deal with only one registration body. There will not be duplication of requirements to provide registration information. For consumers it will mean that there is one easily accessible point for information on financial service providers. For example a consumer could find information about a financial service provider—such as its constitution trust deeds prospectuses and other disclosure documents; details of senior management; and financial reports—all from a single online source. The registration function will be separate from any other merit licensing or qualitative fit and proper tests that the relevant financial sector regulator will carry out. But all information on the financial services provider will be accessible making it a comprehensive database of information on a provider. 
The registrar of financial service providers will undertake enforcement functions in relation to breaches of the registration requirements and will have the power to share information with the Securities Commission the Reserve Bank of New Zealand and other prescribed agencies that carry out supervisory and enforcement functions relating to money-laundering or terrorist financing—for example the police. 
The bill also establishes access to a comprehensive industry-based dispute resolution system to improve consumer access to redress in the financial sector. Effective dispute resolution and redress mechanisms are essential to encourage consumers to participate in financial markets and to promote market discipline for financial providers. Existing voluntary industry-based dispute resolution schemes such as the Banking Ombudsman and the Insurance and Savings Ombudsman already provide effective access to redress for consumers. However they do not currently extend to building societies credit unions finance companies financial advisers and some superannuation schemes. This bill will not see those schemes replaced. In fact some of the existing schemes may expand their coverage and others will model themselves on the existing schemes. 
Membership of an approved dispute resolution scheme will be mandatory for financial service providers that transact with consumers. Consumers in this context include small to medium sized enterprises. I think that is a considerable advance in consumer protection; it recognises that small businesses can be as vulnerable as natural persons. Dispute resolution schemes will be approved by the Minister of Commerce if the schemes meet the principles of accessibility independence fairness accountability efficiency and effectiveness. 
In conclusion I would like to extend my thanks to the industry participants who contributed to this bill through the consultation process and to the officials for all their hard work. I am pleased that the parties in this House have agreed to facilitate the referral of this bill to the select committee. I look forward to seeing the committee look carefully at the detail of the bill. I commend the bill to the House. 
SIMON POWER (National—Rangitikei) 
: 
 We are now in the thick of urgency and the Financial Service Providers (Registration and Dispute Resolution) Bill being referred to the Finance and Expenditure Committee requires some careful attention.  
I start by complimenting the Minister of Commerce Lianne Dalziel on her handling of this particular legislation. I do that in a genuine way because when the Minister set out on this particular course of action off the back of the Government’s Review of Financial Products and Providers she did so using a level of language and rhetoric that was appropriate. She consulted widely in the industry. She kept the issue relatively low profile. She did not take the opportunity in recent months to vilify participants in the industry. She did not at any time I am aware of use the opportunity to stand on a platform and have a crack at—to use a colloquial term—the industry she was in the middle of discussions with over some of the regulatory matters before it.  
This stands in stark contrast to the way her colleague the Hon Clayton Cosgrove dealt with the real estate industry. Let that be a lesson to him. If the language and rhetoric are appropriate if the industries being dealt with are dealt with with respect if their views are listened to if they are quietly consulted and if the process is seen to be transparent and not political people get results.  
This bill comes off the back of the Government’s Review of Financial Products and Providers which was designed to promote confidence and participation in financial markets by investors and institutions and to promote a sound and efficient non-bank financial sector. Since that review process commenced in earnest we have seen a number of second-tier lenders collapse. What that has meant for some 58000 individual investments—not investors but investments—and what the loss of approximately $1.3 billion in investors’ funds has meant is that the magnifying glass has gone on to this process quite significantly. It has taken on a new level of importance in recent months.  
The Minister has been very careful when making public statements about this process. I have listened very very carefully to the language the Minister has chosen in this area. At the end of just about every press release she has issued on this matter she has been wise to state that Parliament cannot legislate against risk. Parliament cannot prevent risk. It cannot educate or inform people to the point where it ends up leaving the Government as a co-guarantor or with some type of vicarious liability because it has overstretched in informing regulating and educating the public and the public may form a view that that level of involvement by the Government has placed it in a position where it may be seen to act as some type of guarantor for these types of investments. That is not the case and should not be the case; nor should any Government or Parliament attempt to legislate for risk. However a suite of bills is currently before the House—one in particular is about to come. Amendments to the Reserve Bank of New Zealand Act the introduction of the prudential supervision regime the registration bill we are discussing today and the long-awaited Financial Advisers Bill which we may or may not see prior to Christmas form an integral part of that suite of bills.  
I think the entire House and all parties are concerned—and if they are not they should be—about the quality of advice being offered by financial service providers. This bill creates a registration system for those financial service providers that they will be required to belong to that will identify them that will allow better monitoring and evaluation and that will provide information for consumers. As the Minister said it is kind of an online one-stop shop source where information—financial statements and the like—will be readily available for those investors and others who have an interest in these matters. 
There is—and I qualify my earlier remarks by saying this—likely to be a cost for this legislation. We on the select committee will be interested to examine the costs to business for this regime where they will be passed on to and who will ultimately end up bearing the cost of this regulation. That needs to be carefully examined during the select committee process. The matter of access to consumer credit—a summit was recently chaired or held by the Hon Judith Tizard I am told—is one we may need to consider in the context of this bill. A particular consideration is whether loan sharks or their equivalent need a similar type of registration system or whether this registration system could be used as overarching legislation right across the financial provider sector. As the Minister noted in a briefing today that is a matter for the select committee to discuss. The Minister pointed out in her contribution the issue of whether a person should be placed on the register if a criminal conviction has occurred. That is slightly trickier than we first thought particularly under the Fair Trading Act and it is a matter that will require some further examination at the select committee as well.  
Although National will be supporting the first reading of this bill and will be looking to play a constructive role during the discussion of this particular suite of bills let us just say that when we get to the Financial Advisers Bill either prior to Christmas or early next year there will still be a number of unresolved issues. The Minister acknowledges that there is still work to be done but it is fair to say this: we have to start this process in earnest quickly in 2008. This is a big deal for the finance sector. This is a significant suite of legislation that the select committee will be required to deal with. National will come to the table of the select committee with an open mind to make sure that a cost-effective efficient system is put in place across these bills to ensure consumer protection without putting Governments in a difficult position and without crossing the line to pretend to legislate against risk which of course we know is inherent in any investment decision. 
CHARLES CHAUVEL (Labour) 
: 
 In New Zealand at the moment there are registration requirements for some financial providers such as banks building societies and credit unions and for some products such as prospectuses under specific legislation but the provisions that require these protections are not comprehensive and they do not identify what financial services a particular entity provides. This situation does not comply with international standards for combating money-laundering and the financing of terrorism.  
Members will be aware that in 2005 the Government announced a review of the regulation of non-bank financial products and providers. The previous speakers referred to this review. The aim of the review was to develop an effective and consistent regulatory framework to promote confidence and participation in sound and efficient financial markets which are clearly essential as we build prosperity in this country. The review has combined a number of separate reviews of financial products and providers that were planned or already in train.  
The Financial Service Providers (Registration and Dispute Resolution) Bill implements some aspects of the highest-priority priorities under the review which are necessary to achieve compliance with international obligations and to better protect consumers. Other aspects of the first stage of the review are being implemented through companion legislation the Financial Advisers Bill and the Reserve Bank of New Zealand Amendment Bill (No 3).  
This bill proposes the establishment of a compulsory register of financial service providers. The purposes of the proposed register include identifying the service providers and ensuring that the controlling shareholders directors and senior managers are subject to criminal checks to enable members of the public to access information on the products and services provided by the entity and to provide information about which consumer dispute resolution scheme the entity should belong to. The purposes also include assisting the registrar and other regulators to enforce legislation regulating the financial sector.  
The bill provides for the Registrar of Financial Service Providers and Financial Advisers to have responsibility for establishing and maintaining the register. The registrar will be the person holding the office of Registrar of Companies—an existing position. That person will undertake enforcement functions in relation to breaches of the registration requirements and will have the power to share information with the Securities Commission the Reserve Bank and other agencies that carry out anti - money-laundering supervisory and enforcement functions such as the financial intelligence unit of the police.  
The bill also includes provisions for establishing a comprehensive industry-based consumer dispute resolution system to improve consumer access to redress in the financial sector. The purpose of the dispute resolution system is to provide a simple low-cost avenue for consumers to seek redress. The dispute resolution system will be fully funded by the industry. Government involvement will be limited to approving schemes including periodic renewal receiving periodic reports and powers of inspection if necessary rather than involvement in the day-to-day operation of a scheme. The schemes to be set up under the bill are intended to be accessible independent fair accountable efficient and effective. I welcome the indication from the Opposition that there will be a commitment to constructive dialogue at the Finance and Expenditure Committee over the details of the bill and I very much look forward to its consideration in that committee. 
Hon DAVID CARTER (National) 
: 
 As my colleague Simon Power has said National will support the Financial Service Providers (Registration and Dispute Resolution) Bill going to a select committee. I guess 2007 will be recalled in history for quite a long time as the year in which we saw a substantial collapse of finance companies here in New Zealand. Mr Power mentioned a $1.3 billion loss which was largely to smaller investors who will suffer that sort of loss for a long long time.  
I note that the Government in this bill and in other bills associated with this legislation is moving to restore confidence within this particular industry. A lot of investors have been badly hurt and I would like to note that this is not entirely the Government’s fault. This trend is not unique to New Zealand. It started in particular in the United States with second-tier lenders there under pressure so there has been a world-wide trend. In many cases it is a loss of confidence that is causing the problems to the extent that some very well-founded finance companies have been pressured although not to the point of collapse because their long-term investors have been scared by some of the horror stories.  
The package we are discussing in this legislation will be coupled with the Financial Advisers Bill. I note that Charles Chauvel interjected during Mr Power’s speech and said that we will be discussing it on Thursday of next week. Mr Chauvel should know. He is a very very senior member of the Labour Government. He is the one who welcomed his own appointment as a parliamentary private secretary to the Attorney-General on 1 November this year. 
Simon Power 
: How is he going? 
Hon DAVID CARTER 
: I think he is going very well in his role. I must admit that he has not had a huge amount of publicity. He got a lot of publicity when he announced his own appointment but he has not had not a lot since. But I am sure that Mr Chauvel is indeed in touch with the Attorney-General who will be well aware of the programme for next week so he has announced to us today that we are back here not only on Tuesday but clearly on Wednesday and Thursday to debate the Financial Advisers Bill. 
On a more cautious note I say that any of this legislation must be balanced. The consumer deserves protection but at the same time any Government initiative to deliver that protection and confidence back into this industry must be very very carefully balanced because if it is not done correctly the protective legislation will become both cumbersome and costly. If that happens it will ultimately be the investors themselves who pay.  
I conclude by echoing the comments made by my colleague Simon Power in congratulating the Minister of Commerce on the way she has worked with the industry to deliver this legislation. I have had the opportunity to speak to a number of people over the last week who certainly welcome the legislation. They feel they have been very adequately consulted and they have been treated with absolute respect. That is in sharp contrast to the response I know Mr Clayton Cosgrove has received from the Real Estate Institute. Mr Cosgrove if he is listening should take heed of the way in which his colleague Lianne Dalziel has delivered this.  
My final point is one I hope Dr Cullen will consider carefully. This legislation is heading to the Finance and Expenditure Committee. I express concern here about the workload we have put on that select committee in the last couple of days. It has received the Reserve Bank legislation and the emissions trading legislation which in itself as acknowledged by the Minister is landmark legislation more so than we have seen in this House in a long time. Here we are loading the committee again with the Financial Services Providers (Registration and Dispute Resolution) Bill and no doubt on Thursday it will get the Financial Advisers Bill as well. 
Simon Power 
: On Thursday? 
Hon DAVID CARTER 
: On Thursday of next week. It will be a long long week but the Opposition is up to it. We have enjoyed the last couple of days and we are looking forward to coming back on Tuesday to continue the debate for the rest of the week. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I rise to support the Financial Service Providers (Registration and Dispute Resolution) Bill and to say that this bill has in common with the Real Estate Agents Bill that one of its purposes is to try to protect small investors. I was not in the Chamber at the time but I certainly hope that the Opposition supported the first reading of the Real Estate Agents Bill. [ 
Interruption 
] I hope that it did support that very important bill. Dr Cullen says— 
Simon Power 
: Why when the whole industry has been vilified? 
MARTIN GALLAGHER 
: To be honest I am staggered and surprised to learn that it did not. The issue addressed in that bill relates to this bill in the sense that the Hon Clayton Cosgrove who is a very very good Minister wants to protect the consumer—the ordinary person—who wants to get a fair shake and that is also the case with regard to this bill. Frankly yes I will concede that the Hon Clayton Cosgrove’s style can be robust but it is a robustness on behalf of the ordinary little people in this country who want to have a fair shake and he is to be strongly commended for that.  
We talked before in relation to other legislation previously in front of the House in terms of the buy-out of minority shareholders about having an environment that protects small investors whether they are investing in their own home or a rental property or are lending their hard-earned money to financial providers. I acknowledge that Simon Power certainly illustrated the huge impact on our economy of the collapse of various finance companies and how mum and dad shareholders and particularly older investors have been swept up in that. Any legislation be it the Real Estate Agents Bill—which seems to me to be a pretty good bill and I am shocked and staggered to have to absorb the information that the Opposition did not support its first reading—or any other bill that helps to protect the small investor is to be commended.  
The Financial Service Providers (Registration and Dispute Resolution) Bill contributes to the aim of our Government’s major reform programme of promoting confidence and participation in the financial markets by investors and institutions no matter how big or how small they may be. The Government also wants to promote a sound and efficient non-banking financial sector which again is very important in terms of international investment in our economy. I note that the bill sets up a registration system for financial service providers and establishes an industry-based dispute resolution system to improve consumer access to redress in the financial sector.  
I will not take too long a call— 
Hon Dr Michael Cullen 
: Oh go for it; there’s no rush. 
MARTIN GALLAGHER 
: There we go the Minister is encouraging me to take a longer call but I will not take very long except to say that I note the bill will set up a registration system for financial service providers that will identify all entities providing financial services in the New Zealand market. As well it establishes a comprehensive industry-based dispute resolution system.  
The registration system set up by this bill will assist the relevant regulatory authorities to monitor and enforce the law and enable sectoral data to be collected. That is a good thing. The register will provide easy access to information about financial service providers to investors and institutions who seek to utilise them and that is another good thing. At present it can be very costly for investors to seek information on the products provided by the various financial service providers. This bill will allow investors to be well informed in their investment decisions. It does not matter whether one is a large investor or a small investor; that is obviously a very very important thing.  
The dispute resolution system will improve customer access to redress in the financial sector. I notice also that the dispute resolution in this bill will be industry-based providing an effective alternative to court action. That is a positive thing. Indeed the involvement of industry participants in the operation of the dispute resolution body encourages the adoption of customer service - oriented attitudes. Reflecting on previous speakers I think it has been extremely sobering to read in the media of the collapse of various finance institutions and the terrible devastating impact that has had on life savings.  
I hope obviously there will be a wide cross-section of submissions to the Finance and Expenditure Committee on this bill. I commend the chair of that committee Mr Charles Chauvel. I think he is making a very very good contribution. He is certainly a very hard-working member of our team. As I said before I see this particular bill very much in the context of other legislation that has been introduced over the last day or two including the Real Estate Agents Bill. I have to say I am still trying to come to terms with the fact that the Opposition for reasons totally lost to me is not supporting that particular bill.  
I commend the first reading of this bill. Thank you. 
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. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Tena koe Mr Assistant Speaker. Tena tatou katoa e te iwi e noho tonu nei i roto i tenei Whare o tatou—special greetings to those of us left here tonight. 
It seems like just the other day—actually it might have been just last night—that I was speaking to the Reserve Bank of New Zealand Amendment Bill (No 3) the companion bill to this Financial Service Providers (Registration and Dispute Resolution) Bill. During that debate we talked about a new breed of financial institutions called non-bank deposit takers—building societies credit unions and finance companies or loan sharks as some of them are known. Both this bill and the Reserve Bank bill introduce a new framework to ensure that all such deposit takers are licensed and to ensure that directors and senior managers are made subject to fit and proper standards. 
The aim of the new framework of course is to promote confidence and participation in financial markets by investors and institutions and to ensure a sound and efficient non-bank financial sector. That is all fine and dandy; this sort of policy change was actually needed some time ago to tidy up the sector and to make it more accountable to investors and consumers alike. The key problem has been the lack of adequate protections for investors and given that more and more people are pulling their money out of finance companies we need to prepare for more collapses before they occur. Although compliance costs will increase the changes are needed. 
Tighter control is needed over some of the rather shaky sharky and shonky financial service providers and advisers whom my constituents tell me have done a lot worse in terms of defrauding people than even real estate agents. Talking about that lot it is worthwhile pointing out one of the flaws in this bill which is the proposed model of dispute resolution. Although dispute resolution provides a level of consumer protection it would have been better if the process were not so dominated by industry players as has been the case in the real estate industry which has led to the Real Estate Agents Bill providing for the dispute process to be administered by the Ministry of Justice. 
This bill before us also establishes a registration system for financial service providers to enable easy access to information about providers and to allow more effective monitoring and evaluation of those providers as well. This is supposed to ensure certain standards for owners directors and senior managers. Although it is great to know that people will not now be allowed to serve in those roles if they have certain criminal convictions are bankrupt or are the subject of management bans history tells us that thieves and crooks come with a range of degrees and titles—particularly the good ones. 
The Maori Party is also very interested in the creation of this new registrar of financial service providers which will have the power to share information with the Securities Commission the Reserve Bank and the police. We will be even more interested to see how it actually rolls out in practice because the bill as it reads presupposes that the Securities Commission will be active and we know that it has no great history of being proactive or diligent in enforcing breaches of securities law. 
Finally it would be remiss of me to leave the House tonight without noting the high finance company charges that often cripple consumers and hinder those on low incomes from seeking development loans. I raise the possibility of establishing a Maori financial institution along the lines of the Grameen Bank successfully set up in Bangladesh. The Grameen Bank and its founder Mohammed Yunus were jointly awarded the Nobel Peace Prize in 2006 for placing trust in the skills and capabilities of the community by lending funds for community development. Best described as a microfinance organisation the Grameen Bank is a community development bank that makes small loans without collateral—no charges low interest and high levels of support and controls. Such a bank for Maori would be well-positioned to lend to those at the low end of the income and assets scale to help them improve their lot through the funding of enterprise development. In the same way that other major financial institutions are backed by the Government we suggest that a Maori bank established along these lines should also be so underwritten in line with proactive recognition of the Treaty partnership. 
In sum we support the changes to ensure that deposit takers are better monitored and evaluated by the Reserve Bank so as to minimise the shock and ripple effects of financial collapse on families and the economy. We would also encourage wider discussion on the development of a financial institution to fund low-level Maori development as an idea whose time has surely come. Tena koe Mr Deputy Speaker. Kia ora tatou e te Whare. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I am pleased to rise to support the Financial Service Providers (Registration and Dispute Resolution) Bill and I hope that next Tuesday we will have the chance to complete the trio with the Financial Advisers Bill which is still below the line. This is part of an important suite of legislation dealing with issues that have been highlighted by recent events. As both Ms Dalziel and I have explained to the House on a number of occasions the legislation has actually arisen out of an extensive programme of review of the regulation of the non-banking financial sector. 
It is important to note that risk is inherent in investment and it is important that people understand what that risk is and judge that risk against the returns they are getting. We have seen in New Zealand over the last year or so many people chasing a small amount of additional return people who nearly always have relatively modest amounts of assets. Mr Brown mentioned people losing hundreds of thousands of dollars. Most of those people are actually people with $20000 $30000 or $40000 as their life-savings apart from their house. Sadly we have seen these people losing some of that money. They are looking for an extra 0.5 or 1 percent but are taking a far too excessive risk in relation to the additional return because of the information available.  
Although we can never completely prevent those things happening it is hoped that this suite of legislation and changes will reduce the chances of that recurring in the next economic cycle. This is actually a very classic outcome of an economic cycle. As asset values rise as people seek higher rates of return and as people become more and more confident that nothing can go wrong people start taking higher and higher risks. Of course eventually things go wrong as they always do sooner or later in this regard.  
As this is the last bill we are doing I think it would be highly churlish of me not to thank the Opposition for its cooperation. I would dearly like to be a fly on the wall at National’s caucus meeting next Tuesday morning as the House manager explains why we have not finished the entire business this week and have had to come back next week. This was the Government’s plan A as I explained to the media and my own caucus on Tuesday morning and the great majority of Government members are here next Tuesday in any case. I particularly thank the Opposition because the way things have turned out means I will now get home significantly earlier than I had been anticipating this week. So I thank those members very much. I expect to get home at the same time next Wednesday as I had been planning. 
RODNEY HIDE (Leader—ACT) 
: 
 Let me too commend the Minister Lianne Dalziel for the way she has gone about this legislation. I think she has done a fantastic job in a difficult area. It is a job most politicians would be tempted to grandstand on and make a song and dance about. I believe that the Minister has actually got in and done the business and produced a bill in what is a very very difficult and fraught area. I also think there is an amazing consensus around Parliament about the limits and abilities of Government regulation when dealing with risk and financial management. This is something I think is new to this House. The consensus is that yes the Government can provide a role in providing better information and in rooting out fraud and fly-by-nighters but it cannot eliminate the risk. There is this peculiarity about people—I guess it is greed and the idea that history does not repeat itself. When a company or financial institution is doing particularly well and when as the Minister Michael Cullen observed people can get an extra 0.5 percent they will rush in not recognising that down through the ages people who have got high returns have had to take on a big risk and have often lost the very money they seek to protect to provide the lifestyle that we would all wish for.  
The Government cannot protect people from their greed or prevent them from taking exceptional risks. It is part of life. But the Government can provide a good regulatory regime that provides the necessary disclosure the necessary information and the desired checks and balances on those people who would stand up and say they will take our money our savings and invest them wisely on our behalf.  
I believe this is very difficult legislation. It is complex legislation with a complex impact. There are high rewards for people who can game the regulatory environment and for those who can find routes through that others cannot and therefore can appear to offer better returns with a suspected lower risk than what is real. Unfortunately we have seen that happen in recent times in New Zealand and that lesson has been hard-learnt for some people. Hopefully it is a lesson that others will pick up on and therefore they will be much more careful with their investments. I commend the Minister for this bill and I look forward to considering it in the select committee. Like Minister Michael Cullen I too thank the National Party members for letting us get home early. Thank you. 
Bill read a first time.  
Bill referred to the Finance and Expenditure Committee.