Financial Markets (Conduct of Institutions) Amendment Bill

Members, we now come to Part 2. Part 2 is the debate on clauses 19 to 21 and Schedule 2—“Other amendments”. The question is that Part 2 stand part.

Thank you, Mr Chair. We’re having a great night, aren’t we? I thought I’d look at new section 113A in clause 20, which deals with sharing of information and documents with the Financial Markets Authority. It states here that “(1) The Commission may provide to the Financial Markets Authority any information, or a copy of any document, that the Commission—(a) holds in relation to the exercise of the Commission’s powers, or the performance of its functions and duties, in respect of this Act; and (b) considers may assist the Financial Markets Authority in the exercise of its powers,”—and this is the important part—“(2) The Commission may use any information, or a copy of any document, provided to it by the Financial Markets Authority under section 30 of the Financial Markets Authority … in the Commission’s exercise of its powers, or the performance of its functions and duties, in respect of this Act.”

So I suppose this is an issue about privacy. It’s about making sure that Government agencies don’t pass over information they shouldn’t pass over and retain what should be kept confidential as confidential information. What assurance can the Minister give the committee that that broad power in new section 113A is actually appropriate and doesn’t actually end up granting the commission—and, actually, the Financial Markets Authority as the recipient—undue access to information that it should not otherwise hold?

I appreciate the member reading through the bill. If he reads two paragraphs further on, also under new section 113A in clause 20, he will see that nothing in this section limits the Privacy Act 1993.

That is true—the Privacy Act is one issue around privacy of client information—but that’s not my point. My point is: there are different types of commercial information, and what this doesn’t do is provide even a clarity that only information that is most relevant to the situation should be provided. What this is is an open-ended power for the commission to grant that information to the Financial Markets Authority. So it’s not about the general Privacy Act, because that underpins all legislation—that’s like 101 in the first year of university—but what I’m getting at is: what makes sure that information that should not otherwise be provided from one entity to another isn’t actually provided? So that’s the point of nuance I’m asking.

I do need to apologise to the member, because the copy of the bill that’s on the Table, of course, doesn’t take into account the changes in Supplementary Order Paper (SOP) 173, and that section is actually deleted from the final bill. So my answer to him: I hadn’t appreciated that. That was the original mitigation, but it’s deleted in the SOP 173 because a similar provision in the Commerce Amendment Act 2022 already exists, so that protection is already provided.

Thank you, and I appreciate the Minister helping with that. The other one I just want to turn my mind to is Schedule 1. This is dealing with provisions relating to the Financial Markets (Conduct of Institutions) Amendment Act 2019, which we’re talking about—clause 91. This deals with the transfer of the licence for a financial institution from existing banks, insurers, and non-bank deposit takers. So there’s quite a few organisations involved in this, and what this does is it sets out that the clause means that, basically, the licence should be transferred, provided that the Reserve Bank actually agrees to it.

What subclause (3) talks about: “The Reserve Bank may withhold its consent only if the Reserve Bank is satisfied” that the financial institution should not have the consent “for maintaining a sound and efficient financial system:”, which means, basically, it’s going broke or trading inappropriately, or “(b) in a case where [a non-deposit taker or a licenced insurer] that withholding the consent is necessary for maintaining [for the insurance sector] a sound and efficient insurance sector.” That all makes sense, but the next clause says, “If the FMA has asked for the Reserve Bank’s consent but the Reserve Bank refuses to give its consent, the FMA must accept the application”—must accept the application—“even if it does not consider that 1 or more of the requirements referred to in section 396 or 400 are satisfied.”

So this just seems weird that on the face of it—and, hopefully, the officials can help here—the Reserve Bank might say, “Look, don’t transfer this organisation.”—and I don’t know why it would only happen in a transition anyway, because the Reserve Bank would normally have stopped—

Point of order. Checking my facts before I brought up the point of order, but this part of the Schedule actually relates to Part 1, section 18. So it’s not in the current part that we’re debating; it’s already been passed. I’d just draw the member’s attention to that.

💬 Andrew Bayly: So would you like to answer the questions?

Good try.

Point of order. It may relate but it’s still set out in Schedule 1 of Part 2.

No; the Minister is correct on this occasion. The question is that the Minister’s amendments to Part 2 set out on Supplementary Order Paper 173 be agreed to.