Financial Professional Services Trading Advice Transparency Bill

Thank you, Mr Speaker. I move, That the Financial Professional Services Trading Advice Transparency Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

This bill is a bill that promotes openness and transparency. I’m really hoping tonight, at least at first reading, that this bill might get the ear of the Government. I know that openness and transparency are important to them, and I have heard them often say that they are the most open and transparent Government ever.

What I want to do, before I start actually speaking about some of the details of the bill, is acknowledge—because this is about businesses going into liquidation or having people appointed when a business is not succeeding—that over the last two years, as we’ve experienced COVID, I know that there are a lot of business in this country that have gone through a lot of pain. Often, when businesses have to go into liquidation or receivership, it is through things that are outside of the control of those businesses, and there have certainly been a lot of things that are outside of the control of many businesses over the past couple of years. I think of businesses particularly in the tourism sector. I think about businesses in the hospitality sector. While it’s not limited to those businesses, there are a wide range of businesses in that category. Many times in the last couple of years, I’ve felt lucky to belong to the agriculture industry, which has actually been one of the industries that has been on the right side of the COVID experience, and we’ve been very lucky.

What this bill is intended to do is prevent financial advisers who recommend a third-party takeover for the management or disposal of a business or its assets from performing such a function themselves. I’m pleased to note that the letter has come through from the Attorney-General, who has considered this bill in terms of where it sits with the New Zealand Bill of Rights Act 1990 and has concluded that the bill appears to be consistent with the rights and freedoms affirmed in the New Zealand Bill of Rights Act. That’s always a good start when you put a member’s bill forward—to have that sense of approval. I know Mr Penk is far more of an expert on those topics than I am, but it’s very good to have that from the Attorney-General’s office.

Really, what it does is those very simple things. It prevents a person from being appointed as an administrator of a company if the person recommended the administration or is associated with the person who has recommended the administration and prevents a person from being appointed or acting as a liquidator of a company if the person recommended the liquidation or is associated with the person who recommended the liquidation.

I think this is a bill—in my mind—that’s very important to New Zealand. We have a good reputation in New Zealand for being a good place for doing business. We have a good reputation for being very strong in business ethics, and this bill’s intent is to enhance our reputation. We are not seen as a corrupt country; neither do we want to be seen as a corrupt country. But if you leave some gaps in the law at times, then it leaves the opportunity for people to take advantage. The thing with this bill is it will remove any inherent conflict of interest that exists for those providing advice on the trading viability of troubled companies who would then go on to be appointed as the administrator, liquidator, or receiver of the company. While there may not be any actual intent with most of the people that would be carrying out these functions, what it would do is remove any doubt if that opportunity wasn’t allowed to prevail in this country.

Often, professional advisers, such as accounting firms, are called in by creditors, like banks, trustees, and business owners seeking advice on whether the company can manage its way through difficult times. The bill makes it very clear to individuals and financial service firms that they can give the advice that sees a company wound up but they can’t then be appointed to wind up the company and then earn fees over the ensuing months or years winding that company up.

Now, I understand in terms of some of the conversations I’ve had around having this bill in the ballot, and the conversations that I’ve had since it’s been drawn out, that there are a range of opinions. Informal feedback from insolvency practitioners suggest that the bill will have the support of a wide proportion of the sector but it may strike some opposition from a few, but vocal, practitioner firms.

I know that not all of the members of RITANZ may agree with what’s contained in this bill. For those who are listening outside of the House tonight—because those inside the House hopefully will know—RITANZ is a professional body for insolvency practitioners. It’s actually the Restructuring, Insolvency, and Turnaround Association New Zealand Inc, which is quite a mouthful in itself, which is probably why the initials RITANZ are used. But it is a professional body. I understand that there are some people in there that hold a differing view to what is contained in this bill. I would hope that if we can get support across the House to get first reading going and get it to a select committee, then those people would be able to come in and have a discussion and also put their views on the table, which would mean that we could come out with a good piece of legislation or potentially even a better piece of legislation.

What I find is that when we’re making laws in this country and we’re moving through legislation, most of the value of the process is when you open a process, call the submitters in, and hear all the points of view. We get a select committee that is usually put together—and, hopefully, in this case, if it goes through, the Finance and Expenditure Committee will have a look at it—and it will be able to assess the views that are being put forward, and, if there are some adjustments that need to be made to the piece of legislation, then they could do it. None of us would be bold enough to stand up and say we were putting up a perfect piece of legislation at first reading. We start off with a good intent, we make it as good as we possibly can, and then we ask submitters and the people of New Zealand, who often have more knowledge about these things than we do, to come in and give their views so that we can make sure that we’ve got the best piece of legislation possible.

The drawing of this bill from the ballot has coincided with changes to the New Zealand Insolvency Engagement Standard. The revised standard includes a new requirement to consider whether there are any reasons for not accepting an insolvency appointment or engagement. The matters which practitioners are required to consider do not appear to include a principle about not accepting appointments to execute actions which they themselves have recommended.

It’s my hope tonight that we can have other parties in the House supporting this piece of legislation. I know we want to keep New Zealand an open and transparent country, and I just think, if there’s any opportunity in any of these transactions for any conflict of interest to be perceived—if you think about the worst-case scenario: somebody actually being asked to transact this process may have an eye on purchasing the company themselves—let’s remove all of those either perceived or real opportunities, take this bill to the select committee, and see if we can progress this through the House. Thank you, Mr Speaker.

The question is that the motion be agreed to.

Thank you, Mr Speaker. It’s great to be able to have an opportunity to take a call on the Financial Professional Services Trading Advice Transparency Bill, a member’s bill in the name of Barbara Kuriger, and I congratulate the member for her bill being drawn.

Prima facie, the bill seems to make a practical change—that is, it prevents financial advisers who recommend that a third party take over the management or disposal of a business or its assets from performing such functions themselves. At first blush, that does seem somewhat reasonable. The bill proposes changes to the Companies Act 1993, in Part 1; in Part 2, it makes obviously considerable changes to the Receiverships Act; and it also comes into force the day after it receives Royal assent. Overall, I understand the purpose of that bill is to remove that conflict.

However—here comes the “but”—but what if we already have conflict management provisions already in the current law, conflict management provisions that, funnily enough, the Opposition agreed to in 2019 when we put through the Insolvency Practitioners Regulation Act? That’s the problem with this bill, from this side of the House. We have the current provisions that manage such conflicts—conflicts of interest on the part of insolvency practitioners and when such conflicts should prevent them from acting on a specific appointment. That’s, again, already been considered and enacted as part of the Insolvency Practitioners Regulation Act 2019.

So Parliament, only a couple of years ago, agreed. We got support from the National Party at the time. The member who was the chair of the Economic, Science and Innovation Committee which looked at this particular legislation—because the Companies Act and the Insolvency Act are actually underneath their remit, not the Finance and Expenditure Committee’s. When they looked at it, they agreed, and there were particular changes that were made by Minister Kris Faafoi at the time in order to get such agreement from across the House. So, again, only a couple of years ago they agreed that a person who has provided professional services to a company in the two years before its insolvency is prohibited from acting as its liquidator or a receiver unless those services advise on the solvency of the company.

Secondly, the Insolvency Practitioners Regulation Act only actually fully came into force in September 2020, so this side of the House believes that that Act created a robust occupational regulation regime designed to prevent inappropriate conduct by insolvency practitioners. This particular member’s bill, however, was only introduced 12 months later, and we have not so far seen sufficient repetitive evidence that the changes made in 2019 require another significant change less than two years after the bill has been enacted. So it’s for those reasons that Labour does not support this bill.

To provide some context for the House as to why Labour doesn’t support the bill, we have to have some understanding around insolvency law and why we landed with the current legislation that makes this member’s bill redundant. Insolvency law can seem complex, and, fortunately for me, one of the roles I had to play in a previous life was to be able to provide the standard practice statements for how the Commissioner of Inland Revenue would apply the tax law around insolvencies and liquidations. So I have a little bit of experience, particularly when it comes to debt collection.

One of the main aims of insolvency law is for businesses to be turned around if they are viable, because that’s what we want. We want businesses to succeed, and that’s important. But if not, they should be wound up and the assets realised and distributed to creditors in accordance with clear rules and with a minimum of harm, both to the insolvent party and to their creditors. This is a system that does rely on trustworthiness and competent professionals to act in the best interest of creditors, and the regulation of insolvency practitioners which was put through in that 2019 Act is an important part of this commerce and consumer affairs legislative framework.

As advised earlier, the 2019 Act changes were made with the support of the Opposition and, again, it was to promote better outcomes underneath the corporate insolvency system by strengthening the regulation of insolvency practitioners. How the Act supported those outcomes was it introduced a robust new regime for licensing practitioners. It provided effective mechanisms for holding them to account and it required things such as professional development to raise the standards of practitioners’ behaviour at the time. Those were necessary changes to ensure that all the insolvency practitioners meet the basic standards of honesty and competency that the public is entitled to expect.

Unfortunately, at the time—and that’s the reason why this regime was put in—there was clear and repeated evidence that a small number of practitioners continued to fall well short of those standards. They used to engage in conduct such as charging excessive fees for their services, carrying out unnecessary work to inflate their fees. They were acting in the interests of the directors of insolvent companies who appointed them at the expense of the creditors, and taking on appointments without the necessary skills, knowledge, or expertise. That insolvency practitioners Act 2019 sought to address those issues by introducing a co-regulatory licensing system modelled on one under the Auditor Regulation Act of 2012, so that’s what the current regime is actually mastered off.

So under the current system, the Registrar of Companies will be required to set minimum standards for licensing insolvency practitioners and to accredit professional bodies, bodies such as that referred to by the previous member. These accredited bodies will be responsible for the front-line licensing and regulation of individual practitioners, which includes regulating their entry into the profession, ongoing competency, investigating complaints against practitioners, reporting on the adequacy and effectiveness of their regulatory systems and processes. Section 5 of the Receiverships Act, which is what this bill sets out to make a small change to, does set out the condition that if you want to be a receiver, you have to meet. So a person may be appointed as a receiver if that person is licensed in accordance with, again, the 2019 insolvency Act, and section 12 of the Insolvency Practitioners Regulation Act says that licences are subject to particular conditions and it sets out the types of conditions that are under section 12. Section 22 of that same Act says, “Registrar may prescribe licensing and other measures”. Again, this is to set minimum standards.

So again, at first blush, it looks like a good piece of regulation. However, on further detailed analysis and understanding the regulatory regime that we have now, some of the history of that regulatory regime—which is, again, only a couple of years old—the lack of evidence that has come to our attention for needing to have this conflict provision, because we on this side of the House believe that the current provisions do address that. Licensing bodies can prescribe conditions. The registrar can prescribe licensing conditions.

So we oppose this bill. We believe that the current 2019 Act is sufficient.

Again, I’ll just conclude my argument: it introduces a robust regime which includes rigorous competency, honesty, and integrity criteria in relation to obtaining and retaining a licence to act as insolvency practitioners. We believe it provides an effective way for holding practitioners to account. The 2019 Act makes other amendments to both the Companies Act and the Receiverships Act. Again, this member’s bill makes those changes again to extend that, and again, we believe that that particular Act updated those pieces of legislation to ensure they were fit for purpose.

We believe that more time is needed. If the other side of the House believes that it’s failing, we haven’t seen any evidence so far to say that it is failing. It has been only two years since the 2019 Act was put in, which, again, had support from across the House. So Labour does not commend this bill to the House.

Kia ora, Mr Speaker. A privilege to speak on behalf of the Green Party on the Financial Professional Services Trading Advice Transparency Bill.

I want to congratulate the member Barbara Kuriger for having this bill drawn and having the opportunity to discuss this. I heard the member’s initial speech about the concerns that she was raising and, sort of, the purpose as to why she should put this bill forward. To us, it was a common-sense change in terms of looking to avoid conflicts of interest and ensure financial advice, and to just give impartial advice.

We do think that there is merit in exploring in a select committee stage whether the current framework is working. I think, as the member to my left indicated, that we have yet to see much evidence of whether the current framework is or isn’t working. I think the select committee stage could potentially be an opportunity to unpack that more thoroughly, and, potentially, seek to make improvements via this bill or identify where there may be gaps. So that could be a good opportunity for Parliament to review whether the Insolvency Practitioners Regulation Act 2019 is fit for purpose.

I think, as my Labour colleague to my left identified, that, again, at first value, trying to basically amend the Companies Act to stop financial advisers that recommend receivership, liquidation, or other forms of third party administration for a company from being appointed to subsequent roles created as a result of that advice is something that, in theory, would seek to address potential issues of corruption and just malpractice. So while we do have a code that is supposed to regulate that conduct, I think the member is expressing those concerns. I’ve tried to do a search online about whether other entities or bodies have raised concerns around this. And I did see Russell McVeagh, I think, had a blog post around this, raising the potential for exploring this but also noting some of the concerns from Labour. And so for us, I think, we do see merit in this bill having further discussion at the select committee stage, and broadly are supportive of the intent of this bill. So we will be supporting this bill. Kia ora.

Thank you, Mr Speaker. I also would like to congratulate the member for having her bill drawn. And I mean this very sincerely, but I do wonder if she missed the memo, because there is nothing wrong with the logic of the intervention. Clearly, there has been a need for professional advisers to not only to do the right thing, to be honest and scrupulous, and to being motivated for the right reasons, but also the perceptions around that for an industry in a sector that sometimes has had a bit of a bad rap. So I do appreciate the logic. I just wonder about missing the memo because, as we’ve heard this evening, there is already legislation in place which achieves what this bill is trying to do. In fact, this bill would reverse some of that impact.

I also query the Green member suggesting that the likes of Russell McVeagh, my old law firm, want to entertain going through a select committee process. That’s all very well and good, because they’re not resourcing it. But where there is no evidence that the current legislation is not being ineffective, then there is no reason to involve taxpayer funding and resources to question whether that legislation is working. Should there be evidence, then, absolutely, but there is no evidence, as we heard tonight from my colleague Barbara Edmonds. So, like my colleague, I agree that on first blush, this is a sensible piece of legislation, it’s requiring professional advisers to not deliver on the advice that they have given due to the possibility of a conflict of interest. So that’s both a conflict of interest or even the perceptions or the questions that might arise in people’s minds. I also agree that it’s really important to have these kind of things in place, to protect the transparency that we have in our democracy and perceptions of our transparency internationally—for all sorts of reasons around economic stability and so on. But the reason that I believe that Restructuring Insolvency & Turnaround Association New Zealand (RITANZ) members are not supporting this bill is because they already know that we have laws in place and they don’t want to reduce their credibility by supporting something which is going to duplicate something which is already in place.

And that group of RITANZ is made up of professionals: it’s academics, judges, bankers, accountants. Their reputations are really important. And I’m sure that those members who are against this going to select committee would have considered what it might mean to support a piece of legislation that is, in effect, duplicating and actually reversing the impact of existing legislation. So the Insolvency Practitioners Regulation Act came fully into force in September 2020, and that did seek to remedy some of the things that the member Barbara Kuriger has talked about, around the reputation of the sector, about the conduct of some of the practitioners, about fairness for those who might be in business who might be facing financial difficulties and grappling with whether their business is going to be viable or not. But also, what the legislation has done is it has also updated other Acts, such as the Companies Act and the Receiverships Act, to ensure that there is a coherence to the sector and to the way that the sector is regulated. So it was a thoughtful piece of legislation that did go through. Normally, in the amount of time—2019, it’s now 2022—we would have seen by now if there were defects in that legislation, we would have evidence of that legislation not working. To date, there hasn’t been evidence of that.

At a time when Kiwis are struggling with the cost of living and just getting through COVID and everything else, we’ve got to be really responsible in how we use public resources to create laws and to review laws. And there are pieces of law that do need reviewing. Absolutely. My perspective, though, is that this is not one of them. There is not a shred of evidence that I’ve seen presented to this House that would suggest that the laws that we have thoughtfully enacted around the sector are not working, and that is why RITANZ members don’t want to support it. They, too, want to keep their professional reputations intact. They want to be seen as doing the right thing for their sector and they are doing the right thing if they don’t support this legislation, just as I won’t be doing. Thank you.

ASSISTANT SPEAKER (Ian McKelvie): I’ve got him right tonight—I call Damien Smith.

Thank you, Mr Speaker, and thank you for your note. The Financial Professional Services Trading Advice Transparency Bill was something we would like to have supported through to the select committee. I think that Labour have used the insolvency angle to sort of flatten the spirit of this bill. It was an excellent technical presentation by Barbara Kuriger, but in terms of how the Restructuring Insolvency and Turnaround Association New Zealand works—and they’ve obviously managed to influence that—but there are still other categories of financial adviser that can recommend various routes of when a troubled company is required to enact these serious provisions of receivership or liquidation.

If you look at this logically, this could have been a bill going on top of a bill, and it could have been done in the spirit of investigating how those people carry out that role. As an example, with PricewaterhouseCoopers, somebody in the accounting team can be sent in to audit a business that’s in trouble. Then, with the Chinese wall put up, their mergers and acquisitions team could actually come and sell it and they’re still part of the same organisation, and this could have been an opportunity to clean things like that up.

On the balance, the bill would have provided more confidence that financial advisers were given sound advice, and there are examples, apart from what Ingrid Leary said, where there have been people who have taken hold of companies and shaken them up and undersold their value and have actually ended up with a beneficial interest at a financial level. This has occurred quite a lot of times in the New Zealand market place. So there could have been a spirit here which would have allowed us to take those particular functions themselves and to run a figure of eight around the insolvency aspect, because there’s more to this than just insolvency practice.

So the bill was supposed to clarify that a financial adviser could recommend and then they would have to go away and not carry out any further role, and I don’t think that’s contemplated in Barbara Edmonds’ definition and explanation tonight of what financial advisers can conduct. She was speaking specifically about the insolvency advisers.

The other thing that I think would have been good in the select committee to talk about is who actually pays the bills for this. It probably gets into trouble. When you own the company, you’re the one who’s going to pay the bill, and so then you’ve got a choice of a professional adviser that you choose or an insolvency firm. You may even decide to continue with another member of their team in another part of the business to either extract value for you or to sell what the bones of the business are, and one of the things that’s easy for a liquidator and an insolvency expert is they get brought in really fast. They have a matter of days to turn the business around, or they have to recommend to the shareholder, to creditors, what should be its destiny, and, therefore, the person that pays the bill should be the one that gets to make the decisions within the framework that Barbara Edmonds was proposing.

There appear to be no significant costs to actually doing this and to drafting a hybrid piece of legislation which would have covered this area, so I think it’s a bit of a wasted opportunity. The person that is employed or otherwise engaged would probably have accepted these rules really easily. So receiverships and insolvencies are just one part of this, and I hope there’s an opportunity for the bill to come back in a different form at some stage to address these issues.

The whole idea was not about remuneration or the firm. It was about the confidence in the advice and getting that correct so that the person advised knew that, as the third party, they had specific responsibilities, and I don’t think that’s contemplated in the existing legislation. So I’m disappointed that it’s not going to go forward, but the ACT Party would have supported it at the next stage. Thank you.

Thank you, Mr Speaker. Often in this House, when we’re confronted with a piece of legislation that’s dealing with what is essentially introducing another layer of bureaucracy, we sit here and think—and none of us ever come to this House thinking that that’s our place in life: to add another layer of bureaucracy.

However, what we very quickly find is that where we are confronted with an issue—and there are many issues that we come here that we’ve known about or we learn about when we’re here—ultimately to do something about it, we need to actually add another layer of bureaucracy.

To give an example of why we do need bureaucracy: bureaucracy’s a thing that’s sort of got a bit of a bad rep over the years, but I always challenge people to, if they don’t like bureaucracy, have a look at a place where there isn’t any. I’m looking at perhaps the organised crime gang scene in New Zealand, of which I have a little bit of knowledge. Of course, when there is—in this case, I’m bringing it down to the bill we’re discussing, of course, Madam Speaker, as I know you want to have us do as speakers.

The Financial Professional Services Trading Advice Transparency Bill, which of course, is about how we deal with receiverships. Well, of course, how we deal with receiverships and issues like this in an unregulated environment is where you’ll suddenly see an individual who may have been driving around in a $50,000 or $60,000 vehicle as part of their own enterprise—criminal enterprise, whatever enterprise it was. All of a sudden, that vehicle will be in the hands of another person because the receivership—or whatever name you will put on it—has taken place in a very informal manner.

But other than those of us who were around and saw how business was done in the mid-1980s leading up to the financial crash in 1987—perhaps showing our age a little then. That was very much a cowboy period. That wasn’t in that part of the environment or business that we recognised immediately as criminal.

But as we had what could only be described—we went from a highly regulated environment to a deregulated environment overnight. Some of the practices—and many books have been written about it—that took place and how people who apparently ended up broke ended up completely holding on to all their possessions through their relationships, often with people who had been appointed as liquidators or receivers.

So anyone who thinks you don’t need good regulation in this area, there’s plenty of evidence that would suggest otherwise.

So that comes to the bill before us today. Again, like everyone here, I congratulate the member. No doubt she has come here, like many of us do; she’s seen, probably from personal experience or certainly one of her maybe constituents has come to her and probably has had a very bad experience where they have—and I see the member nodding; that’s probably why it came here—and so very legitimate reason to bring it.

But that experience is not confined to that member’s constituent or any of our constituents. It is a common practice. So that is why—and I must admit, when I first picked up this bill, “Hmm, that makes a bit of sense.” Then I read further and actually looked at how we’d arrived at this place, and I see that actually it has been addressed. Some of the other speakers tonight have talked about the fact that this was addressed in a piece of legislation, the Insolvency Practitioners Bill. Before coming here tonight, I just took the time to find the commentary on that bill, which actually does address this very issue: part six, where it actually talks about who can act as a solvent company liquidator.

So the very issues that we have spoken about tonight, I think if you have a look through this commentary, you will find that those issues have been well addressed. Many submitters commenting that limiting who was eligible to undertake a solvent liquidation would prevent competent people from undertaking the work, and I think that’s really at the base of this.

I see my time is coming to an end, and I just feel like I’m just winding up on this. So in summary, I’d say this is a world that does require the bureaucracy that often gets a bad name. But we need the protection for everyone involved because this is something that happens in people’s lives that does actually create a lot of problems. Thank you, Madam Speaker.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order!

Thank you, Madam Speaker. I’m always amused at my colleague Greg O’Connor’s ability to go through such a speech to bring some of his police experience into this particular discussion. But I do agree with him on the importance of protection.

Can I acknowledge Barbara Kuriger. It’s always a privilege, I think—I haven’t had that privilege yet—to have a member’s bill pulled from the ballot, but, fingers crossed, I’ll be able to—

💬 Chris Bishop: Oh, one day—one day!

One day, that’s right. I hope—

💬 Chris Bishop: What’s your bill?

I’ve got a great member’s bill that you will love, so watch out for that one.

This bill would prevent financial advisers who recommend that a third party take over the management or disposal of a business or its assets from performing such a function themselves. I consider myself quite lucky this evening to speak on this very important kaupapa, and we have had a number this evening, and I go back to some of the thoughts of previous members that have spoken on this bill this evening.

I’d like to think that I’m a pragmatic person, and there is practical change that sits within this particular bill, and that is that the prevention of financial advisers who recommend that a third party take over the management or disposal of the business or its assets from performing such functions themselves. It does look at what’s reasonable, to an extent, and I’d like to think that I’m a reasonable person and, Ms Kuriger, you probably are too. But there are some challenges that come with this particular bill, and when it refers to the conflict management provisions, I guess the question for us all is: are we saying that there’s currently no regulations in place for conflict management? I don’t think that that would be correct, and that’s the challenge with this particular bill.

We have current provisions that manage such conflicts, currently: the conflicts of interest on the part of the insolvency practitioners, and when such conflicts that should prevent them from acting on a specific appointment have already been considered and enacted as part of the Insolvency Practitioners Regulation Act in there.

We do oppose this bill this evening, and it is the second in train, unfortunately, that I’ve had to speak on this evening where it doesn’t quite adequately, or accurately, address the issue. The Financial Professional Services Trading Advice Transparency Bill—this member’s bill in front of us—would actually oppose the Insolvency Practitioners Regulation Bill, which this Government brought into effect back in September 2020. In the insolvency legislation, we have addressed a couple of things in that particular work that introduces a robust regime, including rigorous competence, honesty, integrity, transparency, in relation to obtaining and retaining a licence to act as an insolvency practitioner. We’ve provided effective ways of holding practitioners to account, and this is a very important thing for me.

The Insolvency Practitioners Regulation Bill makes other attempts to amend the Companies Act and the Receiverships Act, and this bill is aimed at updating these pieces of legislation to make sure that they are still fit for purpose and reflect the new Insolvency Practitioners Regulation Bill.

So there are some challenges in there that we have to work through. I wouldn’t tend to work against legislation that we’ve already put through—in fact, this one opposes that piece of legislation, which wouldn’t make sense to me. This side of the House believes that the Act created a robust occupational regulation regime, and that is important in the way forward and to achieving the transparency that we wish to.

So, sadly, this is my second round this evening of not being able to support a member’s bill. They need a little bit more work, a little bit more research, but good on the member over there. I’m very pleased for you that you’ve managed to pull one out of the ballot, out of the hat—good on you.

Thank you, Madam Speaker. A pleasure to be speaking on the Financial Professional Services Trading Advice Transparency Bill first reading. And my congratulations to my good colleague, Barbara Kuriger, for doing a good job and thinking about the hard-working business owners, mums and dads who own our 580,000 small businesses, particularly in New Zealand.

Hey, I loved that last line from that last speaker, Shanan Halbert, about doing just “a little bit more work”. Well, I just wish the Labour members actually just did “a little bit more work” and actually thought about this bill, rather than read from their notes.

So I thought it’d be useful just to give a little bit of context. Unfortunately, I only have five minutes. But this is really pertinent because, since the start of this year, we are fast approaching 100 building and construction companies that have gone into receivership or liquidation since the start of this year—100 construction companies. And actually, over 200 if you go back 12 months. We have a huge crisis in the building construction industry. It is happening. Liquidations and receiverships are the end results of poor markets and interfering Governments who don’t actually set about trying to help them. So if anyone doesn’t think this an important issue, it is vitally important.

Now, I think it’s useful just to elaborate on what we are talking about here. So a liquidation—and I know Mr Greg O’Connor may have got to the bottom of this, but I didn’t hear it in his contribution. A liquidator is appointed by the company’s shareholders, therefore, if they do it, it’s a voluntary thing; or by unsecured creditors; or, of course, the court. That is what liquidation proceedings are. A receiver is appointed by a bank and that is often where there’s a huge conflict between the shareholders and the banks.

It was interesting, I just thought I would talk to a retired practitioner—and someone said practitioner. I’m just going to quote—just indulge me—what he wrote: “I think this is a good bill. When banks send in an investigating accountant, that is the prelude to whether, in fact, they might put a company into receivership. To advise on the viability of the business, the first thing the accountant does is work out how they can get more work. One of those ways is to recommend receivership. The current Act currently provides that they are not conflicted”—and this is a thing I never heard from any of the members on the other side—“from doing this.”

Now, the other interesting thing is that there is an established practice in Australia where liquidators and receivers, who’ve been banned, actually go and do this pre-investigation work and then recommend their mates to try and do it. Now, I’m not suggesting that happens in New Zealand. But it is a common practice overseas. This bill is about conflicts. It’s not about the Financial Services Legislation Amendment Act 2019, which did make significant and considerable changes to liquidation and receivership position. And we welcome that. But this is a further nuance about dealing with the issue of conflict.

It’s interesting that the drawing of Barbara Kuriger’s bill coincided with changes to the New Zealand insolvency engagement standard. Again, that standard includes the new requirement to consider whether there are any reasons for not accepting a role, such as insolvency appointment. But practitioners do not appear to include a principle about not accepting appointments to execute actions when they themselves have recommended it—i.e., the standard does not adequately deal with the issue of conflict. That is the purpose of this bill. And that is why the Labour members, on the other side, should have actually done some more work. So they stood up and spoke about something that they talked and thought about for a few minutes of reading a few notes that someone in one of the offices prepared. This is a good bill, it should be supported. And shame on you.

Madam Speaker, thanks for the opportunity to follow that passionate speech from the previous member, Andrew Bayly. It’s a delight to stand as part of the Labour Party, the party for small business. We’ve supported small businesses every time we’ve been in Government. We’ve supported the small businesses across New Zealand and we’ve done it through COVID, we’ve done it through the wage subsidy, and we’ve done it through, you know, various loans and support, and R & D credits. We’ve done a lot for small business, and it’s a delight to talk about what we have done as a Government to support—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! It would be a delight to hear the member address the bill.

Thank you—thank you. I’ll finish my response to the member there. Bringing it to the bill, this bill is about having trust in business and the financial sector—it’s more than that, that businesses and individuals do have to have trust in the sector. The member opposite has quite rightly brought that fact to the House tonight that it’s important that there aren’t conflicts of interest. She’s highlighted an example of a conflict of interest in terms of the financial sector. She’s talked about how her bill would prevent financial advisers who recommend that a third party take over the management or disposal of a business or its assets from performing such a function themselves, and that’s a fair point. Look, as one of the previous speakers mentioned, I sat in my office and I read this bill and I thought, “Yeah, sure. That makes sense.” I had forgotten, though—I had forgotten—this piece of legislation here, and I think that both of the parties opposite have very short memories, because in 2019, the Insolvency Practitioners Regulation Act—one that I’m sure some of you might remember—clearly addresses this.

So, look, you know, as others have said, I certainly acknowledge the member Barbara Kuriger. I also haven’t had a bill drawn from the ballot yet—probably a bit tricky at the moment, because I actually don’t have a bill in the ballot, but I am working on one. I am working on one. I’m sure the House will be waiting with eager anticipation in terms of the bill that I’ll place into the biscuit tin soon.

But coming back to the bill, the Restructuring Insolvency & Turnaround Association of New Zealand—now, if there is an organisation that that can speak with authority on a piece of legislation like this, it would be RITANZ. We have heard them spoken about previously; set up in 2015 under the previous National Government. So let’s see what RITANZ say about this bill. So they say, “This issue”—and they do acknowledge the issue—“was extensively reviewed by the Insolvency Working Group in 2016”—so going back quite a way here—“whose recommendations were largely adopted in the 2019 law reforms”, which, as I mentioned before, came into force in this legislation, the Insolvency Practitioners Regulation Act.

Now, it will be interesting to hear from the member when she gives her right of reply in terms of her rebuttal and the arguments on this side of the House, because the arguments have quite clearly been outlaid on this side of the House that there is no need for this bill because it’s already been addressed. But we’ll wait and hear what the member says.

Some people might ask, “How has this been solved by the previous piece of legislation?” I’m sure members opposite are interested in that. So, look, the Insolvency Practitioners Regulation Bill, it makes amendments to the Companies Act and the Receiverships Act. I probably haven’t got time to go into details around that, but it certainly makes provision to ensure that the conflicts of interest that the member outlines in her piece of legislation don’t happen, basically.

Now, if we have a look in terms of regulation, we certainly do need regulation in New Zealand. We need to strike the right balance, obviously, but we are a small country and when we do have a small country—we are, you know, the size of a city like Sydney—

💬 Todd Muller: Don’t be “smallist”.

—it is easy—small but great country, about to qualify for the FIFA World Cup, Mr Muller, which I’m looking forward to.

But if you have a look at some of the regulation needed—there certainly is regulation needed at times, because we are a small country, and conflicts of interest can often arise in an environment like we have in New Zealand. So it’s important that as Governments we continue to keep on top of the regulation that is needed. The member has highlighted it, but unfortunately she was just a couple of years too late. We will not support this bill on this side of the House.

Tēnā koe, Madam Speaker, and thank you for the opportunity to take a call in relation to this bill. I’d also like to congratulate the member Barbara Kuriger for having her bill drawn from the ballot tin. But, like my colleagues, I won’t be speaking in favour of this bill. It was heartening to see the enthusiasm on the other side of the House in terms of speaking about the ethics of decision making. This is something that actually quite excites me as well. Maybe not surprising, I’m also excited by things like the Regulations Review Committee, which I’m a part of.

But I do want to talk about the complex nature of this bill. I think what struck me, when I read the bill, is that when you have a conflict of interest, it’s actually very rare for you to then exclude the decision maker in totality from the circumstances that you’re considering, which is what this bill is set out to do. And even if you look at the exclusions in the current 2019-20 legislation, they’re time-bound in terms of who they exclude from the bill, so it’s that two-year period that they look at. When you have other conflicts that arise, there are often management techniques that you put over a conflict. Part of that could be looking at relevant practising standards, it could be looking at the selection method of decision makers, and it could be looking at the pool of decision makers who you have—if you have a limited pool available, you might have looser measures of managing a conflict of interest.

So I disagree with the assertion that this has nothing to do with the 2019-20 legislation; it does, because that’s part of looking at what the existing practising standards are. You can increase how stringent they are, to protect responsible decision-making, and that is, essentially, what a number of my colleagues have been referring to. There are extremely stringent measures in place to ensure that the people who hold those roles are held to a very high standard, and that’s included in the co-regulatory licensing regime, which has actually quite a stringent accreditation system. And it allows complaints, investigations, and reporting on inadequacy in terms of the standards of those services provided, but also in terms of the selection methods.

A number of people have referenced the fact that there was cross-party support for the 2019-20 bill, which there was. I think there were some interesting comments from many of the members in relation to that bill, some of whom—I think Lawrence Yule, a National Party member, spoke about the—well, he referenced the fact that, actually, there weren’t a high number of practitioners in this area. He wasn’t referencing this issue—he was referencing whether the industry could cover its costs in certain areas—but he made the comment, which I thought was really useful to read, that, actually, this isn’t an area that has a lot of practitioners in it. That is important in terms of understanding the totality of regulation and whether you want to prohibit—which is unusual; it’s actually unusual in the Act at the moment—or whether you want to regulate through using different standards, like having stringent requirements, which is what, again, the 2019-20 legislation did.

So, again, there are a number of stringent requirements already, there is a small pool of providers in this, and then the third thing that we, I think, also should consider is the selection criteria of those who are in positions such as liquidators. I take the point from across the House that that’s not the only position we’re considering here, but that is one. If you look at liquidation methods, you would have things like voluntary liquidation, where 75 percent of shareholders would have to make the decision to appoint a liquidator. So there are steps in place for those people with the best information to hand to make the most appropriate decision about who’s going to perform that task. It’s not that there’s an absence, in this area, of protections; there are protections there.

The final thing that I would say is that I agree with my colleagues that if these protections aren’t working, then, absolutely, we should relook at whether additional protections are needed. But we haven’t yet seen that demonstrated. For the time being, we have a robust set of protection mechanisms across the different categories that I’ve mentioned, so I’m afraid I can’t support this bill this evening.

Barbara Kuriger, five minutes in reply.

Thank you, Madam Speaker. Well, it’s been an interesting debate on this bill. I would like to thank the Greens and the ACT Party and my colleague Andrew Bayly for their words in support of what we’re trying to achieve here.

Now, the last member spoke of stringent requirements. We’ve had members on the other side of the House who have spoken about honesty and integrity and trustworthiness, and you can have requirements and you can have people filling out the documentation, and you can have all of those things in place but there’s nothing like an extra piece of insurance in legislation that says that practitioners are unable to do this, and that is the conflict that we’re talking about.

Now, I think it’s really important to recognise that the people on this side of the House—and that includes the Green Party tonight who have spoken in support of this bill—do realise that things can fall through the cracks, and we are not frightened of sunshine. We are not frightened of having a look at things to see if they are working.

The Government members seem to be so sure that the Insolvency Practitioners Regulations Act, which yes, the National Party supported, is perfect. It seems to be what the Labour members are saying tonight is that “We did something perfect. It’s got no cracks in it. We are not prepared to go and put what we thought, at first glance, was a good bill in front of a select committee so that we can have members of organisations who work in this field every day and are far more knowledgeable than any of us that sit in the House here tonight, or stand in the House tonight, to come in and have a look and point this out.”

I actually said in my initial speech that some Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ) members may not agree with this, and we have heard that. I said “some”, and I think some of the speakers on the other side of the House have taken that to mean “all”. Now, if those RITANZ members are so certain that the Insolvency Practitioners Regulations Act is working then they would not be scared of actually having a bit of sunlight displayed. I don’t want to question the integrity of the majority of those people, but I think when we’re making legislation we’ve always got to be making sure that there are some people that are not falling through the cracks of the legislation. As much as we can put stringent requirements in front of people and expect that everybody will fill them out to the best of their knowledge and the best of their ability, we must, I think, as regulators and legislators, accept that there is a chance that someone will go through the cracks of those systems. I’m sure many of us have had people come to our offices who have had problems. If you happen to be the person—not you, Madam Speaker—but if the person who comes to our office and complains is the person that’s been caught out in a situation like this, where somebody hasn’t acted with the honesty and integrity and trustworthiness that the customer would expect, then that’s when we see these things happening at the worst.

So I think that it’s very short-sighted of the Government and Labour MPs here tonight to think that any piece of legislation that any of us put in place—and yes, we agreed to the legislation two years ago. But because the Labour Party members haven’t seen any evidence that what they did was broken, it is now perfect, and there is no need to actually underpin it and improve it by putting a couple of clauses, both in the Companies Act and the Receiverships Act, that says that we could make this a lot more watertight than it already is. I think that the openness and sunshine of a select committee would have done this a huge favour. But unfortunately it looks like unless in the next 10 seconds the Labour Government members are going to change their mind, we’re not going to have the opportunity to do that. Thank you, Madam Speaker.