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Hon EUGENIE SAGE (Minister of Conservation): Tēnā koe e Te Māngai o Te Whare. I am very pleased to speak on the Financial Markets (Conduct of Institutions) Amendment Bill and support it on behalf of the Green Party. |
The members of the Opposition seem to have their eyes wide shut. They seem to be unaware of the need to have a much greater standard of fairness in the financial sector, as Deborah Russell alluded to. Yes, there is already a licensing regime, which the Financial Markets Authority can administer, but what this bill does... |
This Government is about fairness. I find it extraordinary that members of the Opposition are siding with the big people, the banks, the big insurers, and not with the consumers. We all want financial markets which are fair. What this bill does, by providing a regulation-making power, is not using a sledgehammer to cra... |
The National Opposition did pass some legislation, but like everything, it did not go far enough. This, through using the licensing system that already exists, through using the ability to pass more regulations, will ensure a much stronger standard of fairness throughout our financial markets. The Green Party is please... |
STUART SMITH (National—Kaikōura): Thank you very much, Madam Speaker. It's great to have my first speech in the House for 2020. Unfortunately, it's not on a particularly good bill, but that's been well covered by my colleagues. |
Going back to the New Zealand First speaker earlier who spoke quite a bit about the lack of symmetry or an asymmetrical imbalance in terms of knowledge, there will always be, in a transaction, an asymmetry in knowledge. The seller always, almost always, will know more about what they're selling, about that product, tha... |
We have caveat emptor as my colleague mentioned before—the buyer beware. People have buyer's remorse all the time. They buy something as little as a pair of jeans, perhaps, or as large as a house, a big transaction, they can then have buyer's remorse the next day or in the coming days and have all sorts of regrets abou... |
When we go back to the commission that looked at the banking in Australia and then the inquiry that was held here in New Zealand, yes, they found some issues in there. The main issue was there was a lack of documentation. It didn't satisfy the inquiry as to what the documentation around those transactions was, not nece... |
I just go back to the pursuit of profit. It is absolutely in a transaction. The seller is trying to maximise the price and the buyer is trying to minimise the price; that is how a transaction happens every time. This seems to be a surprise to people on the other side of the House. This legislation won't change that. In... |
DEPUTY SPEAKER: Right, so this is a split call. |
JAMIE STRANGE (Labour): Madam Speaker, thank you for the opportunity to take a call on the Financial Markets (Conduct of Institutions) Amendment Bill—my second speech in the House this year. We've heard from the Opposition that they're not voting for this bill because it regulates companies to comply with ethical behav... |
Look, there is an imbalance of power between financial institutions and consumers—and, yes, in most cases, the seller does have more knowledge than the purchaser—but trust and confidence in our financial sector is a vital part of our economy, and even if the members opposite don't believe that we need balance or that w... |
This has stemmed out of recent reviews into banks and life insurers—and the Green Party member mentioned one of the reviews in Australia, which quite clearly showed up that we do need some regulation. Just to close, this is actually a win-win for banks and institutions and consumers, and the reason it's a win-win is be... |
ANDREW FALLOON (National—Rangitata): Thank you, Madam Speaker. It's my first opportunity to speak in the House this year as well; so can I just welcome everyone back. It's wonderful to be here. I will just be taking a reasonably short call this evening, though, for two reasons: first of all, because I think my colleagu... |
I am quite interested in this bill, though, and particularly the history of it, because prior to coming to Parliament, for a short time I did work in banking and so I am aware of some of the history behind the bill and certainly what happened in Australia. So what interests me is that obviously the Australians went off... |
So it was quite interesting to hear from Minister Eugenie Sage earlier saying that this bill builds on the review that was done in Australia. This intrigues me because what they're, essentially, doing is saying there's a problem in Australia; therefore, we need to legislate in New Zealand. That to me really is suggesti... |
We do support some of the aspects of this bill. There are some important issues in it, and we do support, of course, a strong banking conduct framework, but where I think they go too far is in relation to setting rules for sales incentives by regulation. There's two important parts to that, and the first one of those i... |
I do want to just touch on what the effects of that will be, and actually that's laid out quite well in the regulatory impact statement, which talks about the fact that the bill could lead to more expensive financial products and services, for instance, if costs are passed through to customers. My concern around that—a... |
They think to themselves, "OK, well, this, of course, will have no effect. There'll be no effect of doing this." But of course, as we know, there is an effect because all of those costs just end up getting passed on to the end-user—in this case, the customer or the consumer. So when Eugenie Sage earlier today said that... |
GREG O'CONNOR (Labour—Ōhāriu): I'd just like to correct that previous speaker, Andrew Falloon—that we've had an inquiry into New Zealand. What Australia had was a royal commission of inquiry with the ability to summons people to the inquiry, and anyone who has been subject to a commission of inquiry, particularly a roy... |
I was once the chair of a mortgage company, and that was in the good old days when the margin between lending and borrowing was around 400 percentage points, or 4 percent. Now, when that existed, and that was the financial regime which existed, and no one really needed to do this sort of thing because everybody was mak... |
So this is a very essential piece of legislation. Nobody in banking is a particularly bad person. Nobody in there is out to rip anyone off. What they're doing is doing what humans do: they are out there to make a living the best way they can. Some people sell drugs because it's the only way they can make a living. The ... |
IAN McKELVIE (National—Rangitīkei): Thank you, Madam Speaker, and I will be brief because most of the extremely valuable stuff I was going to introduce to this debate has been introduced already, but I can't resist but to comment on a couple or three comments from Government members who've already spoken. And I want to... |
The second thing I want to talk about was something that Fletcher Tabuteau raised with relation to this bill as well. He talked about the gaps in the legislation. Well, the unfortunate thing about legislation is every time we create a piece of legislation, we create another gap. So you can't plug gaps in legislation wi... |
And the third thing I want to comment very briefly on is that I sort of didn't really like the comment that Jamie Strange made. I thought it was rather a strange comment, in fact, where he accused us of opposing a bill that encourages ethical behaviour. I think we're really opposing a bill that, in my view, is liable t... |
Now, there's a couple of other things I want to comment on, and it's very interesting, because I do think that some of our sales habits—or some of our incentivising of sales—over the years has been suspect. I myself have been involved in the motor industry for a long time, and we had some very odd and unfortunate sales... |
The other comment I wanted to make was around education. I think, rather than keeping passing bits of legislation to protect people from other people, we'd be much better to introduce a whole lot more education into our system around financials and how people should manage their lives. I don't think it would be that ha... |
Some of these transactions are quite complicated. We've seen a number of cases of very complicated banking arrangements that have ended up in court and ended up with people being repaid money and all sorts of things over the years, because they are complicated. Even very simple transactions are complicated. So I think ... |
We aren't supporting this bill, not because we don't think those people that it purports to protect need protecting but because we think it's a completely inadequate piece of legislation and partly already covered. So thank you, Madam Speaker. |
Dr DUNCAN WEBB (Labour—Christchurch Central): Tēnā koe e Te Mana Whakawā. Ngā mihi nui. It's good to be here in this new year. Look, this is a really important piece of legislation. Stuart Smith stood up before and talked about caveat emptor and then made a quite unusual comparison between buying financial services and... |
The document—and let's be honest: who's read cover to cover their insurance policy? I suggest—[Dr Deborah Russell raises hand] Perhaps Dr Deborah Russell, but no reasonable person. The fact is we take it on trust that the insurance company has written fair and reasonable terms. Then, when a claim comes along, all of th... |
We've heard that old term "caveat emptor" bandied about by the other side. There's a reason that it's Latin and hasn't been used for 100 years: it's because it's a pretty useless term. What it means is it's a licence to cheat, to manipulate, to misrepresent, and, basically, to rip the other side off if they're not as s... |
A party vote was called for on the question, That the Financial Markets (Conduct of Institutions) Amendment Bill be now read a first time. |
Ayes 63 |
New Zealand Labour 46; New Zealand First 9; Green Party of Aotearoa New Zealand 8. |
Noes 57 |
New Zealand National 55; ACT New Zealand 1; Ross. |
Bill read a first time. |
Bill referred to the Finance and Expenditure Committee. |
Hon Dr DAVID CLARK (Minister of Health) on behalf of the Minister of Commerce and Consumer Affairs: I move, That the Financial Markets (Conduct of Institutions) Amendment Bill be reported to the House by 23 June 2020. |
Motion agreed to. |
FAIR TRADING AMENDMENT BILL |
First Reading |
Hon Dr DAVID CLARK (Minister of Health) on behalf of the Minister of Commerce and Consumer Affairs: I move, That the Fair Trading Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill. |
The Fair Trading Amendment Bill amends the Fair Trading Act 1986 to introduce new protections for businesses and consumers against unfair commercial practices. Firstly, it introduces a prohibition against unconscionable conduct in trade. Secondly, it extends existing protections against unfair contract terms in non-neg... |
This bill supports this Government's goal of building a more productive, sustainable, and inclusive economy. An important part of achieving this goal is ensuring that New Zealand has a trading environment where both businesses and consumers are treated fairly. At its core, a fair economy is one where businesses and con... |
New Zealand already has a number of protections against unfair practices, including those contained in the Fair Trading Act. However, when consulted in 2018 on whether these protections went far enough, many submitters told us that they did not. We've heard about firms who are bullied by their larger suppliers or busin... |
This stuff matters because it makes it hard for New Zealand businesses to focus on what really matters: developing their products and services, innovating, and growing their businesses. Instead, businesses have to spend hours reviewing contracts to ensure there are no unfair terms. They have to work with their accounta... |
I'd like to talk about some aspects of the bill in more detail: firstly, the bill's prohibition against unconscionable conduct. Unconscionable conduct is serious misconduct that goes beyond what is commercially necessary or appropriate. The bill does not define exactly what is unconscionable; however, the prohibition i... |
Unconscionable conduct will be an offence subject to penalties of up to $200,000 for individuals and $600,000 for bodies corporate. This prohibition is necessary to deal with a very small minority of businesses that take advantage of the vulnerabilities and lack of bargaining power of consumers or other businesses. How... |
Secondly, the bill extends the current protections against unfair contract terms in consumer contracts to also protect small trade contracts. Unfair contract terms are defined as terms that are imbalanced, unnecessary, and that would cause detriment. Small trade contracts are, broadly, non-negotiable contracts between ... |
A standard form contract is a non-negotiable contract presented on a "take it or leave it" basis. For example, a standard franchise agreement used by a restaurant franchiser or a standard lease agreement offered by a large commercial property owner for office space. The bill provides that if the Commerce Commission see... |
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