mr. house has resumed before the dinner break we were debating the second reading of the financial services legislation Amendment Bill and Jonathan yang had his 8 minutes and 33 seconds remaining to speak should he wish to take – thank you madam Speaker I certainly do as the chair of the economic development science in an innovate and innovation committee I'm pleased to come and report to the house on the work of the committee as we listen to 72 written or we received 72 written submissions to the bill and quite a number of those came and spoke to us just for some context in history this bill will in fact the whole regulatory regime for financial advice and financial service providers came into force in 2011 and this bill is based on a statutory review of the existing regulatory regime and that review was completed in 2016 then the cabinet policy and decisions were made on a new regime and in February March 2017 consultation opened up on the draft bill then of course we had an election and coming back into the house the bill was has come to the economic development science and innovation committee would ordinarily go to the Commerce Committee what the bill does it creates a new framework for giving financial advice by amending the financial markets conduct act 2013 and the financial service providers registration dispute resolution Act 2008 and repeals the financial advisors Act 2008 under the new regime financial advice providers being any person carrying on a business of giving financial advice will be required to be licensed by the FMA to give advice to retail clients of course all of this came into being because during the period of the global financial crisis many New Zealanders lost their life savings through poor advice that have been given to them and that amount has been estimated by nine billion dollars so we now have a regime which is robust and that has gone under a period of review and now this bill comes back to the house so as I said the committee receives 72 written submissions 28 were from financial service firms including small and large financial advice firms banks KiwiSaver funds insurance companies trustee companies and other financial service firms 17 submissions were received from industry or professional bodies representing the interests of financial advisers financial service providers insurance companies etc included and that was Chartered Accountants retirement villages and even exercise facilities eight were from law firms seven from individual members of the public six were from individual financial advisers five were from consumer interest groups or dispute resolution schemes and one was from the code working group that is developing the new code of conduct for financial advice so you see there was quite a broad range of submitters that came to the committee the committee heard the submitters here in Wellington and also in Auckland the review found problems with the current regulation of financial advice the review found problems with the misuse of the financial service providers register and there were some key amendments proposed in the bill they included removing the requirement that only a natural person can give financial advice which allows for provision of online advice and people can go to a website of a financial institution they can put in their data confidential of course and there can be assessments made around their data and they can receive advice from that data often called Roble advice expanding the minimum standards of competence knowledge and skill to all categories of people giving financial advice to retail clients this was a very important part of the bill and certainly having a customer centered piece of legislation is absolutely critical and this bill strengthens that so requiring all people who give regulated financial advice to comply with standards of ethical behavior conduct and client care is very much part of this adding a requirement that anyone who gives financial advice must put the interests of the client first and disclose prescribed information it limits who can give a regulated financial advice it simplifies their regime and its terminology for example by removing the categories of authorized financial advisor registered financial advisors RFA's and qualifying financial in entities it means that their requirements to be registered on the New Zealand financial service providers register to prevent its misuse the bill defines financial advice it's making a recommendation about financial products or designing an investment plan and of course New Zealanders all over this country seek that advice they want to prepare for their future and they want to have advice that will give them confidence and surety in that future the best advice possible and of course many people as we learned very early on in the piece that took a wrong financial advice during the financial the crisis that took place they lost the opportunity not only of being able to invest in money but to be able to earn money again and so they're incredibly vulnerable one of the most common types of financial advice relates to switching key we say that funds we noted that a decision to switch between funds within the same managed investment scheme is technically not a renewal of or variation of the terms or conditions of an existing financial advice product therefore providing advice on switching funds could be excluded from their regime we consider that the regime should apply to advice on switching funds within KiwiSaver or other managed investment schemes clause 27 new section 43 1 j2 of the FMC Act would impose a duty on financial advice providers to take all reasonable steps to put the clients interest first we understand that this is to stop advisors from recommending one product that might advance their own interest for example by earning them a commission over another that would better serve the clients interest a matter that has been discussed a number of times prior to this bill coming to the committee to this house and the committee we looked at the conduct of nominated representatives the scope of advice that could be offered by nominated representatives should be limited the intent of the bill is that financial advice provider shal should ultimately be responsible for the conduct of the innominate 'add representatives before the activities of a nominated represent should be tight and controlled by the processes and systems of that provider we looked at exclusions from regulated financial advice particularly for lawyers and accountants who in the normal course of their business may give some degree of advice to their clients we recognize that normal legal and accounting advice may sometimes technically fall under the bills definition of what financial advice is however we consider that lawyers and accountants should not be burdened with additional regulatory controls in the course of the ordinary business or occupation existing regulatory frameworks for the legal and accounting professions should suffice we therefore consider the exclusion necessary to avoid unnecessary compliance requirements and of course costs which are passed to the clients so madam chair I am very pleased to support this bill to the house thank you I call Michael Wood madam Speaker the