Financial Service Providers (Registration and Dispute Resolution) Amendment Bill

I seek leave to present a legislative statement on the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill.

ASSISTANT SPEAKER (Greg O’Connor): Leave has been sought for that course of action. Is there any objection? There is none. That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon SCOTT SIMPSON: I move, That the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill and, at the appropriate time, I intend to move that the bill be reported to the House by 20 October 2025.

This is the third in a tranche of three bills that have been introduced for consideration at first reading this evening. The financial dispute resolution services are essential in New Zealand to ensure that consumers have an effective pathway for resolving issues with their banks, insurers, and other financial service providers. I know that when people have a complaint or a problem with one of those providers, it’s important that they have somewhere they can go to ensure that they get some assistance.

In order to strengthen and improve these services, the Government has developed the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. This bill makes up a package of reforms related to aspects of financial services regulation. Along with the other two bills we have read in the House tonight, they relate to consumer credit and financial markets conduct regulation.

This bill seeks to strengthen the financial dispute resolution framework to support better outcomes for New Zealanders when dealing with financial service providers. The bill does it by strengthening the oversight and independent governance of New Zealand’s financial dispute resolution schemes. This ensures that Kiwi consumers have confidence that the financial dispute resolution service available to them will be well run and fair.

The bill has a number of key elements. Firstly, allowing for greater comparison across the financial dispute resolution schemes. This bill will introduce the power for the responsible Minister to decide when and how schemes undertake independent reviews as a check on their performance. Currently, all approved financial dispute resolution schemes must undertake independent reviews once every five years. However, in practice, these happen at different times, with a different reviewer making it difficult to compare across the schemes. Most stakeholders agree that independent reviews carried out by schemes should be more consistent. The new power introduced by this bill aims to better align these reviews and make it easier to compare the performance of schemes and the dispute resolution system as a whole.

Secondly, safeguards for maintaining independent financial dispute resolution boards—the bill will also establish safeguards for maintaining the effectiveness and independence of the financial dispute resolution scheme boards. It provides a new regulation-making power which would allow the Government to set skills, experience, and independence requirements for financial dispute resolution board members. This will ensure that the governance arrangements of the organisations providing these dispute services will be robust and appropriately focused on the needs of consumers, rather than expressly those of the industry.

In conclusion, though not a large bill, these improvements will make a material difference to strengthening our dispute resolution system and make a real difference for New Zealanders. I’m proud to be able to present this bill to the House.

The question is that the motion be agreed to.

Labour will support this bill to select committee, but we do so with serious questions that must be answered before we can consider supporting it any further. New Zealanders need to have confidence that when something goes wrong with a financial product—like a loan, their insurance policies—there is a truly independent and accessible and fair way to resolve disputes. This reform does look sensible on the face of it, but it is being done in the context of three bills, which, taken together, substantially weaken consumer protections in our current systems and mean that we’ll be applying a high degree of scrutiny to the way that they will interact together.

These dispute resolution schemes are actually an essential part of the consumer protection framework, especially for those who can’t afford to take their bank or insurer to court. It’s also important to think about these schemes and the role that they play within the financial sector as being quite different from the role of the courts in these sorts of disputes. They are meant to be a cheap and accessible way of moving forward, and so it is right that we have review mechanisms—and probably useful that the Minister of Commerce and Consumer Affairs has further review mechanisms—to be able to ensure that that is working in the correct way. Because if people have to take their disputes to court, then there is a significant cost that is placed on consumers and a burden that is placed on consumers too.

It’s very unusual in New Zealand for class actions to be taken on behalf of consumers, and it is also extremely unusual, in any jurisdiction we like to compare ourselves to, for the sort of action that we’re seeing the Government taking now in respect of a class action concerning ASB and ANZ, with 180,000 of their consumers that is on foot at the moment, to extinguish the rights of those consumers to pursue a claim.

Given all of that, when we, as a Parliament, are considering how people should bring disputes with their banks or with their insurers, we need to make sure that everything that we agree to is giving effect to the reality that it is hard for consumers to bring those disputes and that everything should be set up in their favour to make that, administratively, as low a burden as possible so that we can get these disputes resolved quickly and efficiently.

It is also important that there is some degree of bipartisanship around those sorts of dispute resolution processes, because, ultimately, although this is in a financial services bill, it is a question of access to justice. The idea that these disputes that consumers have in their lives are something that can be resolved quickly and can be resolved in their favour is really important when you have just such an outsized power of a bank or a financial institution. You know, the big four banks in New Zealand are Australian-owned; they are enormous, even in respect of the size of the Government, let alone one consumer in the New Zealand market. So setting up these sorts of consumer dispute processes is also about maintaining people’s faith in the system: that if something goes wrong for them, that they have some mechanism of seeking justice and seeking access to a fair outcome. Only by a process like this can consumers hope to have that. Only with the Government in their corner can consumers hope to have some kind of semblance of fair rules that protect their interests. That’s what we’ll be asking questions about.

The two things that the bill basically does—the review process changes and the new regulation-making power—do seem sensible, and that’s why we have supported this. I want to talk about the new regulation-making power, particularly here and flag out some interest there. Because when we’re creating the regulation-making power to prescribe skills, experience, and independence requirements for membership of scheme boards, it will be very useful for the committee to turn its mind to where that appropriate power would sit, whether that would be with the Minister or with the chief executive—because it is a technical skill—or whether it is with some other body within the system. Because what we’re asking for there is a regulation of these schemes in terms of the kinds of people who can serve on it.

Again, when we’re creating schemes that are meant to instil faith in the people who use them, meant to show consumers that they do have a way of accessing justice, it’s important that those schemes are representative of the sorts of people who use them and actually do help people have faith in them, and that they’re not just bodies that represent the industry, that they are bodies that take into account the needs of the consumers and the people who do get loans and get insurance and are worried about their cost of living going up.

It’s for that reason that we support this now. But I hope that everyone in the House turns their attention very carefully to the way that rolling back to these key consumer protections may hurt our system in the long run.

Thank you, Mr Speaker. I rise on behalf of the Green Party of Aotearoa New Zealand to also support this bill to select committee. Now, in terms of the context of this bill, as both the previous speaker, Arena Williams, and the Minister of Commerce and Consumer Affairs have said, this is part of a package of three related bills reforming the regulations around credit markets to reduce compliance cost and improve outcomes for customers, which is, on the surface, incredibly sensible and the approach that is needed.

But there are two things that we’re looking at over here in terms of the context of this bill. Obviously, one of them is the independent review, or the ability for the Minister to decide how financial dispute resolution schemes undertake independent reviews as far as the performance of the scheme—such as who the reviewer is, what the terms of reference are, and any other directions as to how the review should be carried out. So that makes up the bulk of this bill. The second major element of this bill is also to allow the Minister to set requirements for things like skills, experience, and independence of the scheme’s board members, and the grounds for disqualifying a board member.

But, broadly speaking, one of the reasons why we are supporting this to select committee is the fact that when we are looking at the broader vision in terms of the interactions between the consumer and things like KiwiSaver and the banking system, there is a high degree of trust between the two parties. And particularly, for a lot of people, this is something that they put a lot of their trust and, indeed, a lot of their savings into when it comes to, like I mentioned, either things like KiwiSaver or loans or credit cards, etc. I think having the financial dispute resolution system is a really important ability and important avenue for the people of Aotearoa to be able to use this particular service, which is free and is also, comparatively speaking, less arduous than going through the court system.

I think the previous speaker, Arena Williams, also mentioned that part of the situation we’re in is because, simply, we don’t have a similar mechanism for class action here in Aotearoa, as we see in other places.

But, for example, some of the things that the financial dispute resolution is able to assist people with is things like the management of accounts and products, the provider of activities relating to fraud, the quality of financial investment or mortgage advice given by the provider, management of payments, or incorrect application of fees and charges. So it is quite a broad scope that the financial dispute resolution scheme is able to provide.

So this is something that is incredibly important. However—and I think this is something that the previous speaker, Arena Williams, alluded to as well—what we’re fundamentally looking at in this bill is allowing more executive power and regulatory-making power for the Minister. I think this is something that is going to be really important to flesh out during the select committee stage when we’re looking at this—the scope of such executive power and how it can be used.

I can see we have the chair of the Regulations Review Committee here, as well as various members of the Regulations Review Committee. It would be really important to also hear that particular committee’s analysis on this bill, especially to do with things like—just to flag some of the things that would be really interesting—what some of these criteria are, or the precautions or considerations the Minister must take, when setting requirements for the skills and experience. Also, from my perspective, when we’re looking at the possibility and grounds for disqualifying a board member, what are going to be some of the grounds, and whether that is potentially also going to be open to politicisation.

Again, we have heard that this scheme and the broader scope is going to be really, really important in the broader context, and that what we are trying to do is to provide better confidence and better trust from a consumer perspective in our system, especially when it comes to things like their savings and their livelihood. However, what we don’t want to see is a stage where things like this could be potentially politicised, depending on who the Minister is at the time.

So there are a number of really good things. I think the ultimate outcome, hopefully, if we’re able to do this accurately, is something that is going to be beneficial for consumers in general. But we just want to have the opportunity to flesh out more around the regulatory-making power aspect of it during the select committee stage, but we will support it to select committee.

Thank you, Mr Speaker. It’s my pleasure to rise and speak on the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. It seems like of the three bills we’ve now got some support across the House for this bill, which—I think this has already been outlined—is looking to improve the financial dispute resolution aspects of our financial services sector. I think we should get this off to the select committee as quickly as possible so it can meet up with the other two bills and get the work under way of hearing submissions. I commend this bill to the House.

Thank you, Mr Speaker. I rise on behalf of New Zealand First to support the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. Firstly, this bill is around consumers and making sure that they have a scheme that’s robust and that they can actually trust, and that actually provides for resolution—especially around, instead of using courts, that it’s actually a free way for consumers to have protection, and often that’s with banking, insurance, KiwiSaver providers, or other financial service providers that they may have disputes with.

This bill gives improved oversight of the scheme’s providers, which is going to be very important, and it’s effective in partial governance of those scheme boards that this bill was set up so that it’s efficient. So, on that note, New Zealand First will support this. We look forward to the submissions with the other two bills that make this a tranche of three, actually seeing how they all interconnect and hearing from submitters. So I commend this bill to the House.

Thank you, Mr Speaker. As has been canvassed with the previous two bills, this is the third leg in the trinity of reforms that we are putting through the House and sending off to select committee for extra scrutinisation over the coming months for the House to report back. And so I commend this bill, I encourage submissions, I look forward to the discussion, and we’ll take it from there. Thank you.

Well, I’m glad that Mr Brewer is going to send this bill off for some “scrutinisation”—also known as “scrutiny” in some places, but that’ll do! As has been said, of the three bills tonight, this is the one we’re supporting, and one out of three for the other side is pretty bad.

The dispute resolution framework is actually a really good part of our financial services ecosystem. In other spheres, we’ve talked about the problem of timeliness of justice, of cost of justice, and so on, but in the financial services sector—it’s not perfect by any stretch, but it’s pretty good. It’s low cost, it’s speedy, and it gives results which most of the participants consider to be a fair outcome and a fair procedure, and that’s the best you can ask for. We don’t want to see that undermined, so we will come to the select committee with some reservations. Certainly, the independence of these dispute resolution entities is of critical importance, and the Banking Ombudsman Scheme is a good example of a scheme that’s become, over the years, more and more independent and has had its jurisdiction expanded significantly. I think the confidence in that sector has benefited from it. Ministerial oversight is one thing, but ministerial appointment of reviewers we want to have a bit of a think about. Also, ministerial dictation of when the review is to occur may also be problematic.

The other question we have is around rulemaking, in terms of making rules for these reviews. We want to be clear what the bounds of those rules will be, because we know that there are some rules that should be made here in this House and they should be made by the highest lawmaking authority in the land, and we don’t want to delegate too much power to the Minister, in terms of fundamental design questions about what the review might look like and what the rules around the dispute resolution scheme might look like, because we think that that makes it subject to the political vagaries of the time. The Hon Dr David Clark, the Minister at the time, set up this framework—a great MP, a great Minister of commerce—and he did it very well. He brought together existing dispute resolution schemes under this umbrella, and consistency across them is good. Certainly, the schemes themselves have been working hard to make sure there is congruence in terms of jurisdiction, in terms of procedure, timeliness, and what consumers can expect.

We come to this with an open mind but with the usual concerns of the Labour Party—that we want to see the ordinary person put first. We want to make sure that this isn’t just making it easy for the Minister of Commerce and Consumer Affairs or the ministry or the industry; we want to make sure that we’re left, at the end of the day, with a better, more effective, fairer, and, ideally, cheaper—most of them are free, so that’d be hard—dispute resolution system. That is how you build trust in a system. As L. D. Nathan said, it’s the putting right that counts—I think it was—and these dispute resolution systems are about putting things right. But, again, we’ve just got to make sure we don’t erode trust in the system by giving the Minister too much say over timing, over the reviewer, over the procedure, or over any other aspect of it. Independence here is absolutely critical. I look forward to it. I commend it to the select committee.

Thank you, Mr Speaker. Simplify, remove undue compliance costs, and improve outcomes for consumers—that’s really the purpose of this bill. It’s very simple: an improved oversight of the approved dispute resolution scheme performance, which is fantastic. As my good colleague said, robust scrutinisation is what we’re all about.

Cameron Brewer: Scrutinisation.

RYAN HAMILTON: Scrutinisation. So, with that, I commend this bill to the House.

You know it’s getting close to 10 o’clock when people start reading dictionary definitions and doing accents. We are now getting into the third bill of the “Holy Trinity”, and it has been a little bit like Groundhog Day. It has been a little bit like Groundhog Day—it has been a little bit like Groundhog Day, because the same people have stood and made more or less the same speeches along the same points from the same part of the House, looking after the same part of financial transacting and transactions and financial services. They’ve been looking after the big guys. They haven’t been looking after everyday consumers and the people who rely on these financial services, sometimes not when everything’s going well and you’ve got, you know, a calm state of mind and the ability to assess the kinds of contracts that you’re signing. I think that’s something that is very easy for colleagues across the House to lose track of in the House.

Now, we do support this bill to select committee, but I wouldn’t want anyone to get the impression that that’s because you’ve worn us down, because it’s definitely not. This requires a lot of scrutiny. After my earlier speech this evening, which was so well received by my colleagues across the House, I’ve actually received email correspondence this evening since that speech from a senior lecturer at Auckland Law School who has provided a very, very well-researched, written, and presented document specifically outlining their concerns about some of the changes that have been pushed through as part of what has been dubbed a “Holy Trinity”. I think that’s what will be so valuable about the select committee process: to actually bring in those perspectives to the conversation so that it can be properly assessed and reviewed. So I look forward to this bill being supported through to select committee. Thank you.

I am in full, strong support of the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill, because this bill is about one thing: protecting Kiwi consumers by making our financial dispute resolution schemes more effective, more independent, and more accountable. It introduces three main provisions: first, it empowers the Minister to ensure that dispute resolution schemes are properly reviewed; second, it sets clear standards for the governance of these schemes, makes sure board members have the right skills, experience, and, importantly, independence from the industry’s influence; and, third, annual reports must include information about scheme operations and any independent review reports received in the past financial year.

This is practical, principled, and forward-looking legislation. Therefore, I commend this bill to the House.

Motion agreed to.

Bill read a first time.

The question is, That the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.

Instruction to the Finance and Expenditure Committee