Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill

I move, That the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill be now read a first time. It is my intention to move that the bill be referred to the Commerce Committee for consideration, provided I have the support of the very generous members on the other side of the House, who have recently been speaking on another bill. The reason that I am hoping that there will be support in this House for this bill is probably that the pressure for this legislation has diminished as a result of the settlement between ANZ and ING, who were the original reason for this particular measure, and the Commerce Commission. The Commerce Commission and ANZ and ING came to a settlement back in June 2010, which was after I had drafted this particular bill. I was not as fortunate as the previous speaker, Simon O’Connor, was on his bill, having had it drawn from the ballot at the first instance. I reinstated it into the ballot after the general election, and it was then that I was fortunate enough to have it drawn.

However, the issue that came to the fore in that particular case, as I say, has been addressed with the settlement but does not prevent the same thing from happening again, which is why I think the bill is important, and why I hope that members opposite will agree to refer it to a select committee. I know that some members were mistakenly of the view that this matter is now addressed in the Securities Commission legislation and the Financial Markets Authority legislation, but this particular situation arose out of having to preclude the response of the two particular regulators, which were the Banking Ombudsman and the Commerce Commission. The legislation surrounding them does not provide the same protections that are available under the securities legislation. I did just want to make that point, because I would be very disappointed if people did not support the bill based on a misapprehension of the particular issue.

There are a lot of people in this House now who probably do not have the same history around this legislation; certainly it got a lot of publicity at the time. Some members of the House will not have heard about the ING-ANZ Frozen Funds Group Trust, which was established, and one of its leaders, a guy called Gerard Prinsen. I actually brought a photo to the House. This is a photo that sits on my desk. It has “Dalziel’s Bridge” written on it. It is actually a photograph; I have no idea where Dalziel’s Bridge is. If anyone does know where it is, it would be very nice to go and see it. It could be Scotland, and there it would be called “Dee-elle’s” Bridge. But, anyway, the reason that I always thought that this photograph was kind of amusing was because my press secretary always used to say “Build a bridge.”, which was her way of saying “Get over it.” But the message that came with this photograph—and this was presented to me by Gerard Prinsen—was that the strongest bridges are built while the rivers run dry. The point is that there are times when we have an opportunity in this House to take up a case on behalf of a group of people who have been unfairly treated or who have found themselves in a situation where they look to Parliament for a solution because they cannot find that solution within the community or within themselves.

What this bill does is be a bridge; it is designed to be a bridge. It bridges the gap between those who have the power to impose intolerable conditions on others when a settlement is being negotiated and to say it is a fair deal and those who have no alternative but to accept the offer while it is on the table. And why do they have to accept the offer? Because those offers are always made with a deadline, and if the offer is not accepted by the time the deadline comes, then where do you stand? Does that really leave people in a position where they are bargaining on a fair basis? That does not actually stop a hard bargain being driven, certainly, even by a person in a dominant position. What this bill is designed to do is to stop them being let off the hook for behaviour that does not meet the legal standard imposed by a regulator—in this particular case, the Banking Ombudsman or the Commerce Commission.

I think the most difficult experience that I had as a Minister of Commerce was the sense of helplessness that I felt as I watched the inevitable domino effect that flowed from the original finance company failures in 2006. The fact that my predecessor had already begun a consultation process in terms of the regulation of financial advisers, and that I had already released nine discussion documents collectively known as the Review of Financial Products and Providers, before the first string of finance company collapses occurred, really paled into insignificance against the extent of the losses that people had suffered. And it was not like the proverbial run on the bank either. Fixed-term investments meant that thousands of people literally held their breath until they could take their money out. Of course, once they could take their money out, there was the second string of failures, beginning with the collapse of Bridgecorp in 2007.

I received report after report after report of people facing individual financial ruin as a result of an investment decision in one of these companies. It became very apparent to me that it was not greed that drove the investment decisions—I think greed had a place, but it was at the other end of the spectrum—but rather a lack of knowledge about the nature of the risk that people face. I just want to quote from the media release that the Commerce Commission put out at the point of settlement: “It is important that consumers are able to make properly informed decisions, based on clear and accurate information. Investors decide where to invest their money based largely on their appetite for risk. Throughout our investigation investors have told us that they would not have invested in these funds if the actual risk had been represented accurately,”. That was what was so fundamentally wrong.

The examples of the lack of integrity in the sector have really been the most appalling aspect of what has occurred, and although commentators rail against the failure to regulate fast enough, I have to ask the question of where the major exposés were that led people to be aware of the nature of the risk that they were facing. And the truth is that a lot of people in the media were silenced by threats of legal action from those who did not want to have the real risk exposed. So we are dealing with powerful organisations, well resourced, up against the little guy. In the case of the media, they are even able to prevent them from publicising the risk that people face.

I just wanted to say that because I did want a context for the legislation, and I just want to say what was objectionable about the ANZ-ING offer. It said this: “By accepting this Offer you agree to surrender, settle and release all other rights or claims you may have against certain parties in connection with the relevant Fund … including any claims or the extent of any claims of which you are not currently aware, and any claims brought on your behalf or for your benefit by another person. … It also means you are agreeing not to benefit from any claim made by any other person in connection with the Funds …”. A release disclosure document was annexed to the offer letter, and this contained a list of those covered by the release—ING, ANZ, New Zealand Guardian Trust, and every single one of the financial advisers who had advised on the investment in the fund—and referred specifically to investigations being undertaken by the Banking Ombudsman and the Commerce Commission. The question that was really raised for me was whether, as a matter of public policy, companies that may have transgressed the regulatory framework that is designed to protect investors should be allowed to make a settlement conditional on these terms.

So this is the question that this bill seeks to answer. It may not be the perfect answer, and there may be elements of it that the select committee would like to address. I am perfectly open to that. What I do want this House to do, though, is to refer it to the select committee so that these people who did not have their day in court can essentially have their day in court in front of the select committee.

I am very happy to stand and speak on this member’s bill, the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill, presented by the Hon Lianne Dalziel, who was chair of the Commerce Committee in the last parliamentary term. It was a very good committee, which was able to work very well together. But before I come to what I want to say, I would like to say this. Tēnā koe e te Mana Whakawā. Tēnā tātou e te Whare. Whakanuitia Te Wiki o Te Reo Māori.

[Greetings to you, Mr Speaker. Greetings to us, the House. Celebrate Māori Language Week.]

💬 Hon Trevor Mallard: No, that’s wrong.

It is very good to celebrate Māori Language Week. The honourable member across the way obviously feels that he is incredibly fluent and knows everything. I cannot wait to hear—I cannot wait to hear—him stand and greet us in Te Reo.

This bill was introduced by Lianne Dalziel in April 2010, perhaps at a time when there was a need for it, but perhaps there is not the need now, as she has commented on, because of the Financial Markets Authority Act 2011, which has come into place, and which established the Financial Markets Authority on 1 May 2011. The authority has been in operation for just over a year, and by all accounts, from what I hear in the sector, it is achieving very good results and has certainly been in this first year a well-respected authority, and able to bring through the regulation—and enforcement of those regulations, of course—that is necessary. National does not support this bill, because the Financial Markets Authority is doing a very good job of covering the aspects that the member has raised. The current law is sufficient to deal with the legitimacy or otherwise of legal settlements, and there is no need for legislative change.

The instance that the honourable member Hon Lianne Dalziel raised regarding the ING situation, of course, did take some considerable time and attention of the Commerce Committee. I believe that back in that time there was very genuine concern about the matters that the member raised. We were very pleased to be reported to by the Commerce Commission on the satisfactory resolution to the claims of people who had invested with ING. Indeed, the Commerce Commission acknowledged the cooperation of ANZ National Bank and ING throughout its investigation of that situation and the settlement discussions. The Commerce Commission was able, in its capacity, to bring through a resolution that it said was the biggest resolution, the most successful resolution, it has undertaken in its history. That does go to show that it was effective and brought quite a degree of satisfaction to those members of the ING Frozen Fund Group Trust.

The purpose for which the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill was drafted—and back in that time we acknowledge that there was genuine purpose—related to concerns over the compensation received by ING investors, and they have been resolved. We now have a situation where, through the Financial Markets Authority, we have a very good regulator, which is able to step into situations and bring some direction and some resolution. We also know that the corporate trustees that act as watchdogs in these issuer funds have progressed, in terms of the Securities Trustees and Statutory Supervisors Act, which came into force on 1 October 2011, whereby back at that time all current corporate trustees had to apply for a licence within 1 month of that enactment in order to receive a 1-year temporary licence.

So the supervision of the supervisors—the licence that they have to apply for to the Financial Markets Authority—brings in a regulatory system that we believe is more than adequate to meet the needs and the challenges and concerns that the member has raised. To the extent that the bill was drafted as a response to a problem, the action taken by regulators demonstrates that there was no such issue that required resolution, nor do we believe that this is a widespread issue that requires further legislation. We believe that matters, legislation, and regulation, and the enforcers of those regulations, are working very satisfactorily.

We also know that, for example, yesterday in this House two further commerce bills to strengthen our finance sector passed their first readings. These are coming to the Commerce Committee tomorrow. What one of them does, of course, is ensure that there is no opportunity for overseas people to set up New Zealand companies and use those for nefarious and criminal activities. That bill, the Companies and Limited Partnerships Amendment Bill, is strengthening our robustness and ensuring that our reputation as a country stands up. Of course, the first reading of the Commerce (Cartels and Other Matters) Amendment Bill was also passed, so that we could ensure that there is integrity in terms of competition in this country.

Over these last few years the National-led Government has been working very strongly, under the initial leadership of the Hon Simon Power and now the leadership of the Hon Craig Foss, to bring some real robustness to our financial markets. Establishing that one-stop shop, the Financial Markets Authority, is the real kingpin that will bring a sharper focus on enforcing the law. Bringing that tighter oversight is absolutely necessary and essential, so that investors in this country can have confidence. With the financial companies’ collapses, which is what this bill is essentially looking at, in terms of some aspects of that—the contracting-out component, particularly—one of the things that that did, in terms of people losing their life-savings, is erode confidence. Look, we know that confidence is absolutely essential in order for investment to come into this country, so that business can have capital that would continue to see resources come to business and the market place.

So our considered opinion is that we already have in place legislation, we already have in place entities, and we already have in place changes to our legislative regulatory framework that are going to address all the issues that the honourable member’s bill is proposing. At this point in time I would commend the member for what she has done, and just say that she was a very good chair of that committee and obviously has a lot of experience, but we are not supporting this bill.

The problem with the speech that we have just heard is that it is a record of a number of measures that have been passed or are under contemplation by the House that would absolutely improve our regulatory environment and confidence in the markets, but none of the measures listed by the member who has resumed his seat would address the particular problem that this bill, the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill, is aimed at.

I do ask members opposite to think carefully about their position on this legislation. It will not do to oppose it on the basis that we have just heard from Jonathan Young, because the problem that Lianne Dalziel has identified in respect of this bill could still happen under the current legislative framework. A corporate with a high degree of market power could still write, in the middle of an investigation by a regulator, to a group of investors who were out of pocket and say something like this: “By accepting this Offer you agree to surrender, settle and release all other rights or claims you may have against certain parties in connection with the relevant Fund … including any claims or the extent of any claims of which you are not currently aware, and any claims brought on your behalf or for your benefit by another person. … It also means you are agreeing not to benefit from any claim made by any other person in connection with the Funds ….”.

It should not be possible for a corporate to be able to write to individual mum and dad investors—that is a term that the other side is very fond of—in those terms in the middle of an investigation and be able to shut the investigation down, effectively, because the individual investors fear, quite justifiably, that if they do not agree, either they will get nothing or they will have to wait years and years and go through litigation and expense in order to recover what is their right. Even today, with the oversight of the Financial Markets Authority and with the improved regulatory framework in the finance area, which my friend and colleague Lianne Dalziel began the process of putting in place—and I have to say she knows it as well as anybody I know, and knows it better than most—this sort of behaviour would still be possible.

I just want members opposite to bear in mind this: markets work effectively only where market failure is not allowed—where there is not allowed to be exerted a gross imbalance of power by those who are able to do it. All that Lianne Dalziel is trying to do by this measure—it is a considered measure, it is a carefully crafted measure, and it is a measure that she has given a lot of thought to based on her experience as a very successful and well-regarded Minister of Commerce, and, as Jonathan Young said, the well-regarded chair of the Commerce Committee of this House in the last term—is redress the imbalance that I have identified.

Jonathan Young, as I said, read out a list of legislation, most of which members on this side supported because it is good legislation. It carries on the institutional agenda that we began to try to strengthen confidence in the financial markets. But the fact remains that none of those provisions would remedy the evil that this bill is designed to remedy. None of those pieces of legislation would fix the problem that Lianne Dalziel has identified. I urge National Party members to reconsider their position on this legislation, because if they do not it is our duty to make sure that all those mum and dad investors who were out of pocket through exercises of grossly imbalanced market power, such as the one referred to in the explanatory note, understand who is on their side and who is not.

Please, members opposite, think carefully about this. You want to be on the side of decency. You want to be on the side of mum and dad investors. If that is the case, you will support this legislation.

Thank you for the opportunity to speak on the first reading of the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill. The purpose of the bill is to amend the Illegal Contracts Act 1970 to expand the Act in order to exclude attempts to grant an individual distribution of any proceeds of any settlement to one individual of choice.

The collapse of the financial sector has been distressing for thousands of New Zealanders. Many lost part or all of their savings. Most New Zealanders know someone who has been affected by the collapse of financial institutions. The current law is sufficient to deal with legitimacy. This bill could be detrimental to New Zealanders and could deter settlement by the parties of civil disputes. Settlements provide parties with the ability to resolve disputes and to come to decisive conclusions, to the benefit of all concerned. The bill also avoids the prohibitive cost of taking settlements to court.

The National-led Government is focused on creating strong economies and improving the job market, which will, in turn, provide financial security to families. Strong capital markets provide a vital source of finance to help our businesses grow, thereby creating jobs. Yesterday two commerce bills were read for the first time that aim to strengthen our financial sectors. These were included in National’s 120-point economic development plan and are a priority for this Government. National will not be supporting this bill. Thank you.

Tēnā koe, Mr Speaker. Ngā mihi o te ahiahi ki a koutou. I am pleased to take a call to speak on the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill, and, indeed, to speak in support of what we believe is a useful and a still very necessary bill, despite the protestations of the Government speakers so far.

The Greens are not always persuaded that it is a good idea to resort to a legislative solution for a one-off event or one-off problem. Often you simply end up with the sound of stable doors slamming. You end up with legislation that is unnecessary—something that is trying to deal with a problem that has already passed. But as Mr Chauvel has already articulated, this is still a very live problem. The mischief that this bill seeks to remedy, to resolve, is still very much alive. The possibility is that we could once again see something along the lines of the ING-ANZ issue, or event. There is a very real possibility that the very uneven distribution of power could put us in a situation again where the well-being of the investment of large numbers of small investors is at risk and where those people are effectively obliged to gamble on what might be the outcome of a deal, essentially, being offered to them by a bank, by an insurance company, or by whatever the organisation may be.

We ought not to have to argue for the principle of avoiding a situation where people or organisations can contract out of their legal responsibilities. That principle, you would think, would be generally acknowledged. We see it in the Consumer Guarantees Act, where suppliers cannot contract out of their obligations to consumers. It is a different situation with trade relationships, clearly. But the key principle is that people cannot be obliged, or, even if they think they have contracted out, that there is a legal protection to avoid that happening. We see it in the Consumer Guarantees Act, as I have said. We see references to it in the Fair Trading Act—the extension of that being the unfortunate practice of people being persuaded to buy these quite valueless extended warranties, for example. There is a well-embedded legal principle of not allowing people to contract out of responsibility.

Effectively, that is all this bill seeks to do—to make a very minor amendment, albeit a significant one to a piece of legislation, so that people are no longer, as I say, at some future time put in a position where they might have to second-guess whether taking the deal that is currently on the table will leave them better or worse off than waiting for some legal process, some regulatory process, to work its way through and come to some sort of resolution.

Clearly, that statement would be opposed by those who might be on the other side of that equation. I was interested to note a newspaper article in the Otago Daily Times from the time when this bill was first presented. A gentleman from the ANZ, the managing director of private banking and wealth—a splendid title—was concerned about the so-called retrospective nature of this bill. He said that it might “create uncertainty for business if regulatory and legal requirements could be subject to change”. He said that “Under the bill there would be no incentive for parties to agree to out-of-court settlements, because agreements to settle disputes would never be full and final”. That is all very well, but it rather overlooks the fact that this situation only occurred in a case of what was, at best, gross negligence and, in fact—as was described earlier—was the failure of a company entrusted with people’s investments to operate to an appropriate legal or, indeed, ethical standard. The best protection for companies holding investments against being taken to task in this sort of thing is simply to act legally, responsibly, and ethically in these cases. The notion that this would somehow disadvantage the large corporate organisations is simply laughable, in fact.

The Frozen Funds Group Trust, or movement, if you like, was commented on. I think its website has some interesting and useful information. I think that as the campaign quite rightly states on its website, which is now effectively an historic item: “The campaign shows what a small group of committed people can achieve.” I think that passing this legislation would be something of a legacy for that small group of people who did stand up for their rights, and who worked very hard and fought very hard to get a reasonable outcome out of the situation.

We support this bill and would encourage others to do so. Kia ora.

I am pleased to take a call on the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill. I would like to acknowledge the Hon Lianne Dalziel and the motivation behind this bill. However, the purpose of this bill as drafted has been resolved. It is apparent that the current laws are sufficient to deal with the legitimacy or otherwise of legal settlements, meaning there is no need for legislative change. I would like to draw attention to section 4 of the Securities Act and clause 15 of the Financial Markets Conduct Bill. I will go to the Financial Markets Conduct Bill, clause 15. I will not read the whole thing, but it states: “A provision of an agreement or a deed is void if it provides that a party to the agreement or deed is—(a) required or bound to waive compliance with any requirement of this Act or the regulations; or (b) taken to have notice of any agreement, document, or matter not specifically referred to in the relevant disclosure document (if any).” Both of these regulations have been drafted to prevent persons seeking to contract out of New Zealand securities legislation, which provides additional reassurance.

It is possible that this bill could be harmful also, as it could discourage settlement in civil disputes, which could lead to uncertainty, cost, delay, and having to take disputes to court. There is also concern that the bill may cause harm by creating an impression that such contracts were not, in any event, already illegal.

Finally, I would like to draw attention to some of the great work this Government is doing in restoring confidence in the finance sector. I would need an hour to go into the achievements by the Government in this area, but here are just a couple of them: the creation of the Financial Markets Authority, which is a one-stop shop that has a sharp and clear focus on enforcing the law; cracking down on loan sharks; and combating anti-competitive behaviour such as price fixing. As part of the Government’s plan for economic growth—

Sitting suspended from 6 p.m. to 7.30 p.m.

I have listened closely to the Hon Lianne Dalziel, and, like I say, I commend her and understand the motivation behind the development of the bill. I would like to just come back—I thought I had run out of time, but seeing as how I do have the time, I would just like to come back—and point out another safeguard through regulation. That is through the Securities Act 1978. I go to section 4(2), which is: “A condition of any agreement requiring or binding an applicant for securities to waive compliance with any requirement of this Act, or purporting to affect him or her with notice of any contract, document, or matter relating to the securities that is not specifically referred to in a prospectus or registered prospectus, shall be void.” So this, combined with the Financial Markets Conduct Bill, provides a good safety net and puts protection in place, and comes back to the point that, really, this bill of the Hon Lianne Dalziel is now redundant.

I would just like to finish by saying that the Government has already started to put in place a very, very good programme to make sure that there is actually confidence put back into our financial markets and our capital markets, and confidence is beginning to be restored. I just want to thank you for giving me the chance to speak to this bill. Thank you very much.

New Zealand First supports the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill going to the Commerce Committee and congratulates Lianne Dalziel on bringing it forward. The problem addressed by the bill is a matter that has needed to be addressed for some time and has had a very significantly adverse effect on a large number of people. I am very disappointed to hear of National members’ opposition to the bill, because they are effectively opposing the needs of the elderly people and mum and dad investors whom they claim to support. New Zealand First, on the other hand, is always very keen to support the elderly and mum and dad investors in particular, and this is one of the ways in which that can be done.

The provisions of the ING-ANZ settlement concerning the Frozen Funds Group, which gave rise to this bill, were utterly deplorable. It amounted to nothing more than bullying people into accepting settlements with excessive and unethical provisions, using their unequal bargaining power to achieve that. That is something that this House should take particular notice of. The behaviour of ING in this matter demonstrated the need for tighter regulation of the whole industry, and that did result in the 2011 legislation relating to the Financial Markets Authority, but this bill is still needed, and that is the point that my friends on the other side of the House do not seem to have grasped. They need to have a look at it again.

This bill addresses a specific problem, which I have already referred to, and it needs particular attention. Simon O’Connor, in talking to the Joint Family Homes Repeal Bill, referred to efficiency and to tidy legislation. This is one of those issues that do need to be tidied up. It is not solved by disputes resolution procedures or anything of the kind. The practice complained of needs to be made clearly illegal.

In the circumstances of the ING case, the general release clause of the kind investors were required to sign to obtain the benefits of the settlement was objectionable, especially the words: “including any claims or the extent of any claims of which you are not currently aware, and any claims brought on your behalf or for your benefit by another person.” So any claim or right arising as a result of the Commerce Commission inquiry would have been avoided, and any benefit arising indirectly by the action of another investor would also be avoided. That is not proper and needs to be made illegal. These provisions are nothing more than trickery and they should not be allowed. The bill declares such provisions to be illegal under the Illegal Contracts Act 1970, and rightly so. It is exactly the legislation that we need to address this issue.

I would like to also comment on the commencement date. Although New Zealand First normally opposes retrospective legislation, we would in this case approve the 10 July 2009 commencement date in the circumstances of the particular case that I have referred to, and in relation to the matters that gave rise to the problem to be corrected by this bill in the first place. If there is to be a debate about the place this bill has in the regime of protections for investors, then the correct place to have that debate in that sort of detail is the select committee, not this House. In fact, if you reflect upon the relatively lightweight debate that we have heard from the other side, then you would have to say that there is no possible way they could properly vote against this bill, based on what they have said so far.

What I would respect and what New Zealanders would respect is National members changing their position, turning up at the select committee, debating the detail of the bill properly, and then reaching a decision. I and other New Zealanders could accept that. But what we cannot understand is why, based on the actually frivolous, I think, arguments that have so far been put forward—there is no possible way that anyone could have respect for a conclusion based on that level of debate.

So I would really encourage my friends on the opposite benches to have another look at this bill, at least let it go to the select committee, debate it properly, and then make a decision—and that is fair enough. For all of those reasons, New Zealand First says that we must allow this bill to go to the select committee, and we support it for that reason.

It gives me pleasure to speak on this bill, the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill in the name of the Hon Lianne Dalziel. I congratulate Miss Dalziel not only on having the bill drawn from the ballot but also on drafting it up and bringing it before the House. I previously have had the luck of having a bill drawn from the ballot and, a couple of weeks ago, a second one, so I know how difficult it is for this to happen and sometimes a little bit of luck is what is needed. Can I also say to Miss Dalziel that I believe she has put this legislation together with good intent. Therefore, I just want to recognise that, and I know that she has thought long and hard about this.

Others in the debate have made a number of points from our side of the House, which I will not go over in great detail, but I say only that when Miss Dalziel first drafted this legislation there probably was a problem that existed. Certainly, many of us were contacted, received emails, and so on from constituents and others who were going through a very difficult process with the ING organisation regarding their frozen funds. Since then we have had legislation that has come through the Parliament, which has entered the place, and I do believe it addresses this issue. That is one of the main reasons why on our side of the House we will not be supporting this bill.

What I would say to other members who have asked the Government to reverse its position and send this bill to a select committee so that we can have an ongoing debate with New Zealanders about this is that, actually, when it comes to members’ bills and many other bills that come before the House, parties have positions, and we do not always send bills to select committees. Indeed, my first member’s bill was not sent to a select committee, even though I think it was an issue that New Zealanders might have wanted to have a say on. So I respect that parties do have different positions, and we do not always send these bills on. In this case, therefore, it is difficult for us to sit and hear that we should do that just so that others can have a say.

One of the great things about this Parliament is its ability to talk about issues and to debate them, and it takes a majority in this House to decide whether we will go further. Unfortunately here today we have decided that this bill is not something we would support. The intention I do recognise is a very good intention and, as I said earlier, I recognise that Miss Dalziel brings this here with good intent. But it is our opinion that the issue has been dealt with in previous legislation. Therefore, it is probably not something that needs to take extra time of the House or of a select committee. Thank you.

It is a great pleasure to take a call to support the Hon Lianne Dalziel’s member’s bill, the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill. Actually, it reminds me of the good old days when Ms Dalziel chaired the Commerce Committee, of which I was a member. Ms Dalziel was a good chair. Many have acknowledged that she was a good Minister, and will be a Minister again in 2014.

I would like also to acknowledge another former member of the Commerce Committee, the Hon John Boscawen, and thank him for his support of this important bill. Mr Boscawen has, obviously, some unfinished business with regard to this important bill. In his speech to the ING Frozen Funds Group Trust in Napier in March 2010 he said he would be working hard to convince his four other ACT colleagues to also support this bill to its first reading. I am not quite sure what is on the mind of the current ACT member, the Hon John Banks, nor am I sure whether Mr Boscawen’s position has any influence on the current ACT Party.

I would like also to thank the Frozen Funds Group Trust. Going back to the days of Commerce Committee of the 49th Parliament, the interest of its members in this particular issue was heightened with every new issue of their newsletter. Although the settlement the members of the group received from ING was far short of their expectations, like Mr Boscawen has said, the settlement may never have happened had it not been for their dedicated commitment to that task and, in Mr Boscawen’s words, “the military style nation-wide organisation” with more than a dozen branches throughout New Zealand.

Much has been reported in the media of individuals facing financial ruin as a result of an investment decision in those finance companies. For those largely mum and dad investors a lack of knowledge about the nature of the risk they had been exposed to was one of the main factors. From the perspective of the finance companies, I agree that in some instances the losses incurred have resulted from a dramatic change in the world markets and also a fall in property values, which honest directors could not reasonably foresee. But the media reports are never short of examples of the lack of integrity in those finance companies and in the sector. Mismanagement, inadequate disclosure, hidden and excessive commissions for financial advisers, and, in some cases, blatant fraud, etc. were all contributing factors. On the other hand, inadequate regulation and the failure to enforce that regulation have also been vital contributing factors.

Therefore, the purpose of this bill is to seek justice for everyone who invested in the two frozen funds, and to increase protection for future investors. The bill amends the Illegal Contracts Act 1970 to extend the coverage of that Act to make it unlawful to limit the power of regulators such as the Commerce Commission to award a remedy or distribute the proceeds of any settlement or court order to any individual. The issue arose from the ING settlement, where investors with money caught up in those funds were forced to sign away their rights from gaining any benefit from someone else taking action against ING, including the regulator. I have no problem with the company making a settlement conditional on not proceeding with a civil course of action, but this case was being investigated by the Commerce Commission at the time, and the Commerce Commission was included in the release. Allowing such a provision to stand would effectively prevent the Commerce Commission from fulfilling its role of upholding rules that are designed to protect investors. So the bill does have a retrospective aspect whereby they are found to be in breach of their legal responsibilities to their investors.

As a matter of public policy and of protecting the interests of the investor, I commend the bill to the House.

It is a pleasure to rise and speak in this debate as it draws to a close. The Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill in the name of the Hon Lianne Dalziel is, as my colleague Todd McClay said earlier, a worthy and justifiable piece of legislation to be introduced, except that, as with many things in politics, timing and luck are actually quite important. This is a piece of legislation in its draft bill form that has, in fact, had its time and has been and gone. What has emerged in the time since the meltdown of ING is that this John Key - National Government has, in fact, taken a very strong position in determining that our capital markets should be strong, and that the regulatory environment in which our capital markets operate should be strong and well respected. Indeed, we have seen two pieces of legislation introduced into this House in the last 48 hours or so that have gone further to strengthen that position. Strong capital markets are, indeed, important to us all.

The current law is sufficient to deal with the legitimacy or otherwise of the legal settlements. Indeed, the mover in her opening introductory comments said—and I just wrote them down as she said them—that the need for this bill has diminished. Well, I would suggest to you that in fact the need for this bill has diminished to a point where it is absolutely no longer required at all. She went on further to say that the bill may not be a perfect answer. I would suggest, indeed, that she is quite right; it is not a perfect answer. Indeed, it is an answer that is no longer required at all.

To the extent that the bill was drafted in response to a particular situation, which arose as a result of the ING frozen fund situation, it caused a great number of New Zealand investors enormous concern and heartache at the time. Indeed, the whole financial crisis of the time created a situation for many New Zealanders where their life savings were diminished and, in some cases, completely done away with. Of course, that is not a situation that anybody would want, let alone a Government. So how did we respond to that as a responsible, coherent, and caring Government? Well, we introduced legislation that ensured that our regulatory environment would be protected and strengthened. As part of our 120-point economic plan, we have been focused, terrifically, on these sorts of matters. It is our priority to, of course, build a more competitive economy, a bolder, brighter, and stronger economy. What we have done is ensure that everything is put in place and we have attempted, of course, to provide restored confidence in the financial sector, because it is restored confidence that will give New Zealand investors an opportunity, with real strength of confidence, to invest again. They have not had that for a long period of time, so we are very focused on that.

We have tightened the oversight of those working in the financial market sector, and they now operate in a regulatory regime that is going to be very, very strict in terms of what they can do and how they process their transactions. One of the things that we have done is remove the barriers to trans-Tasman business and progressed legislation that will enable us to meet our single economic market achievements with Australia. We have rewritten a 33-year-old securities law, leading to the Financial Markets Conduct Bill. Those are just some of the measures that we have taken as a responsible and caring Government to ensure that our regulatory environment is robust and strong, and that is one of the reasons why we will not be supporting this first reading.

I am very disappointed that the National Government has adopted a position in opposition to a bill, the Illegal Contracts (Unlawful Limitation on Regulators’ Powers) Amendment Bill, because its members had been advised by their research unit notes that the problem is all fixed, because the problem is not all fixed. It was very interesting that that was the case with every single member of the National Government who spoke, with perhaps the exception of Jonathan Young, who sat on the select committee that heard all of the evidence that was presented in relation to the finance company failures and that heard from people who had lost money in the ANZ and ING debacle, which should never have been allowed to occur in this country. People will reflect, I think for a long time, on the behaviour of a number of the people involved. But let me just say that he at least understood what it was that the bill was designed to do, because he was not sticking to prepared notes.

The truth is that Government members have been told that the legislation is no longer necessary because it is fixed with the new requirements that say that a provision of an agreement or a deed is void if it provides that a party to the agreement or deed is required or bound to waive compliance with any requirement of this Act or the regulations. That is not what people were required to do.

In fact, the way that the group that was established at the time described it was that they said the offer’s condition was that customers would surrender their right of legal recourse against ING, ANZ, or their financial advisers. Customers also lost their right to benefit if the Commerce Commission had found ANZ or ING breached fair trade. The Frozen Funds Group Trust has called this a form of blackmail. And actually it was, because there was nothing else. They had to accept the offer, or the offer came off the table. It expired at midnight on a particular day, and that was the end of the offer. So they had no choice but to accept the offer, and the condition was that if there was a breach of the rules that apply under fair trading with the Commerce Commission, if the Banking Ombudsman were to make a ruling that was generally applicable, then you would get no benefit from it. You had to rescind that right.

The problem that I have with that is simply this—and there is no problem with making the settlement conditional on not proceeding with a civil course of action; I have got no problems with that. In fact, that was an issue that came up as well. That occurs every day. We give up something in order to get something. In fact, the settlement with the Commerce Commission was so that it did not take them to court for their blatant breach of the Fair Trading Act. But where a regulator has identified that there has been a breach of the rules that were designed themselves to protect investors, then no agreement that in any way undermines the authority of that regulator should be allowed to stand. It should be illegal. That is why I chose that particular model of the change to the Illegal Contracts Act.

I know that the Financial Markets Conduct Bill is in front of the Commerce Committee at the moment. There is no harm in sending this bill to that select committee so that they could make sure that they get that clause of the legislation into shape, where it would actually protect people from being blackmailed in this way in the future. I think that that would have been a reasonable outcome, instead of having a predetermined position, coming to the House, and actually arguing a point of view that was not substantiated by the legislation that they were referring to. I think it is a disappointment because this was a chance for the Government to set aside, perhaps, the politics of the situation.

In fact, when I was the chair of the select committee I can say without a shadow of reflection that we worked really well together on both sides of the House—with the Greens, as well—in order to achieve some good outcomes in relation to the financial regulation that we started and that National continued on. I believe that this was an example of a bill where the Government has simply just misunderstood that there is a gap in the legislation that needs to be filled. This was a bill that could have filled that gap, and I make a last-minute plea to the Government: please support it to the select committee. At least we can resolve the differences there.