Financial Services Legislation Amendment Bill

I move, That the Financial Services Legislation Amendment Bill be now read a third time.

Can I begin by thanking all of those groups who have contributed to this piece of legislation getting to a third reading—first and foremost, those who work in the financial sector who have worked alongside officials from the Ministry of Business, Innovation and Employment in a very consultative way and will continue to work in a consultative way as we work through the code working group process to ensure that we land with a code of conduct for the sector that works both for the sectors and in the best interests of consumers. I do know that some people who have contributed are still watching because they want to make sure that this piece of legislation does finish its third reading at some stage.

I would just like to reiterate some of the comments that I’ve made at recent financial sector forums. We do want to make sure that we get the balance around the final code right. There is a process that we have to go through first to get some feedback from the Financial Markets Authority (FMA) before we finalise the code for the financial services sector, and we want to make sure that that process is done swiftly in order to give the sector the time it needs to transition to the new regulations within this Financial Services Legislation Amendment Bill.

We want to make sure as a Government that New Zealanders are making wise, informed, and motivated financial decisions. It helps set themselves and their families up for the present and for the future—whether it be decisions around savings, around KiwiSaver, or around taking insurance. But very key to that is advice that consumers get from people working in the finance sector that they rely on. The Retirement Commissioner’s office recently came out with a statistic that said nearly 70 percent of New Zealanders have money worries. A lot of that, I think, comes from a lack of confidence from a lot more New Zealanders than we think. The advice that they get or the information that they make on some pretty crucial and large financial decisions for themselves and their families isn’t necessarily as well informed as it could be.

Certainly, with the Financial Services Legislation Amendment Bill that is starting its third reading today, we want to make sure that the financial advice that is being offered is of a higher standard, and that will come about from the legislation and the code itself, but also, inherently, that consumers feel that they can trust the advice that is being given by those in the financial sector. This is an important piece of legislation to ensure that that trust is there, given the context of what has happened across the Tasman, with the royal commission in Australia, but also the two reviews that were carried out by the Financial Markets Authority into the banking sector, and the Reserve Bank and the FMA around the life insurance markets, which did show that while they had concerns, they weren’t as marked as the serious concerns that we have across the Tasman.

This piece of legislation and the work that we will do off the back of those two FMA and Reserve Bank reports, we think, from the Government’s perspective, will certainly put in train measures to give consumers more confidence in the finance sector and in the advice that they will depend on and want to trust if they’re making those wise, informed, motivated decisions that we want them to make.

This piece of legislation also introduces a licensing regime for those who want to offer advice in the finance sector. That will be undertaken by the Financial Markets Authority—that is a good thing. There are also some measures around the Financial Service Providers Register, which will toughen and make things have more stringent measures, again, for those who want to offer financial advice. But, at the end of the day, we want to make sure that New Zealanders have confidence both in the finance sector and in the advice that they will be getting from those around those important financial decisions that I talked about: setting themselves up for retirement, taking out a mortgage, and getting themselves insurance for a rainy day and for peace of mind. It certainly has been highlighted by the two reviews by the FMA and the Reserve Bank that work needs to be done. This piece of legislation will go part of the way. The consultation that we’ll do off the back of the two reviews that I’ve mentioned already will go a long way to addressing some trust issues, certainly that consumers will have and, I think, to be fair, a lot of those in the sector have had for some time. They know that if their industry is to flourish, then consumer trust is a big issue that they need to address.

I’m very happy that we’ve got to the stage where we’ve got to a third reading of this escalated bill. Again, my thanks to the officials, to the code working group who have worked in a difficult and challenging environment at times but have got to the point where they have delivered a draft code, and again also to those practitioners in the sector who have been part of consultation, and especially also to those small financial advice firms who we have met in the likes of the Hawke’s Bay recently to make sure that we are meeting their needs, because I think there was certainly a rich vein of concern at the outset of this process that small advice firms may be inadvertently predominantly affected, as opposed to some of the bigger advice firms in the likes of the bigger centres. Hopefully, we can reach a point of consensus where big firms and large firms are dealt with in an even manner, because we want to make sure that the amount and quality of financial advice for New Zealanders is of good quality and that consumers can trust. So, with those comments, I would like to commend this bill to the House.

Thank you, Mr Assistant Speaker. I rise in support of the Financial Services Legislation Amendment Bill in this, its third reading—a bill that is coming, I hope, with unanimous support to a conclusion. The thing that impresses me most, in the way that we can summarise the heart of this bill, is that the fundamental objective is that it is all about ensuring that advice ensures a good customer outcome as its chief priority. That means we’re putting the customer—or the consumer, in this case—at the heart of our legislation and of the code, as well, that will be governing the behaviour of providers of advice and that, at the heart of all of this, we’re putting the consumer first not for—well, actually for a number of reasons, but perhaps the most important of those is the information, the symmetry, that exists in the purchase particularly of financial advice.

It is well understood that most purchasers—not all but most consumers of financial advice—know far less about the advice they’re receiving than the professionals that are giving it. That does place them at some degree of risk of receiving advice or taking advice that is actually not necessarily in their very—

Sorry to interrupt the member, but it’s come time for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.