Financial Service Providers (Pre-implementation and Adjustments) Amendment Bill
Wednesday 23 June 2010
Rahui Katene, MP for Te Tai Tonga

We all agree that one of the clearest indications that things must have changed in terms of creating an environment where integrity, accountability and transparency actually count for something when we are able to link to the Ministry of Economic Development website and have immediate access to the Cabinet Paper that proposed this Bill a mere six weeks ago.

No need for applying for material under the Official Information Act; or a desperate call for briefings from the Minister or his officials – it’s all up there on the website, as clear as day.

I have to say I like the sound of the proposals in the paper dated 3 May 2010. They tell me that under the Financial Advisors Act; advisors will now have to register; obtain authorisation; comply with the competency and conduct obligations and make a full disclosure before providing advice to a client.

The paper goes further and promotes the establishment of a regulatory framework that is designed to encourage public confidence in the integrity and professionalism of financial advisors.

As every member in this House knows the issues of integrity and accountability in the finance sector are absolutely pivotal.

Given this, I was somewhat surprised that out of the 93 submissions received on this only one submission came from Maori.

Mind you – that one Maori submission was a fairly significant submission in that it came from the Maori Trustee.

The Maori Trustee wanted amendments to the Bill to clarify and limit the scope of ‘estate or interest in land’ and to provide an express exclusion for the Māori Trustee in respect of the Māori Trustee’s core statutory functions.

The Maori Trustee recommends that in order to limit the uncertainty in respect of “estate or interest land” and subsequently to lessen the impact this uncertainty has in respect of leases, licenses, and mortgages that section 5 of the Financial Advisors Act should be amended.

The amendment is to insert a definition for “estate or interest in land”, which provides that: “estate or interest in land does not include advice, guidance or recommendations relating to the granting of any leasehold interest in or licence right or any form of easement or mortgage in respect of land.”.

Now that sounds all fairly technical legalese to me – but I have it on pretty strong authority – the authority of the Maori Trustee – that such a definition would be a key way of protecting the interest of Maori land owners in respect of estate or interest land – and that’s something, therefore, that we want to promote.

The other key issue put forward by the Maori Trustee is to exempt the Māori Trustee in line with its previously exempted statutory functions. These include obligations under the Māori Trustee Act 1953 and Te Ture Whenua Māori Act 1993 in respect of interests in Māori land and the holding and investing of money on behalf of the beneficial owners of such land.

The reason put forward by the Maori Trustee is that there is already significant transparency, control and oversight over the operations of the Māori Trustee.

This is by virtue of the Māori Trustee being a Crown entity for the purposes of reporting. It is also demonstrated through the Māori Land Courts oversight role in respect of the various trusts for which the Māori Trustee is responsible.

Another means of ensuring there is sufficient transparency, control and oversight is through the funding arrangements and reporting requirements with the Crown.

Mr Speaker, I am not the authority on the Maori Trustee by any means, but I do believe that the issues raised in their submission are worthy of further consideration of the House.

Finally, I note the concerns that have been raised about some of the changes in the legislation, in terms of what impact they will have on consumer protection.

Some key stakeholders have been concerned about the flexibility that has crept in through the exemption for financial advice. This would have the effect of excluding a large number of organisations in which financial advice can be justified as incidental rather than core to their business.

That could mean anything from a rental car company to a retail firm discussing hire purchase requirements.

I think the hub of their concerns rests around what the term 'incidental' means and how it is interpreted. In worse case scenario that might mean people having a tutu with financial advice and getting away with shoddy advice on the flawed basis that it is not a central component of their business - thereby meaning they don't have to comply with the registration or authorisation process.

The last thing we would want to see is that the very people we are seeking to protect, are unwittingly being exposed to yet another level of risk without the protection we envisaged would be possible in the legislation.

Finally Mr Speaker, I remind the House that Māori-generated economic development will play a significant role in the future of this nation. The last thing that any Maori shareholder or business person wants to see is another Blue Chips disaster blighting our financial horizons.

The Maori Party will support this Bill, and encourages further debate and consideration of the range of issues that clearly still require further thought.

ENDS

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