Financial Service Providers (Registration and Dispute Resolution) Amendment Bill

Second Reading Hon CAMERON BREWER (Minister of Commerce and Consumer Affairs) (14:17): I move, That the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill be now read a second time. This bill makes targeted but important improvements to New Zealand’s financial dispute resolution system, a system that provides consumers with free, independent options to resolve disputes with banks, insurers, lenders, KiwiSaver providers, and other financial service providers. I want to thank the Finance and Expenditure Committee for its careful consideration of this legislation. The committee received 63 written submissions and heard 13 oral submissions, reflecting strong public interest in ensuring our dispute resolution framework is fair, independent, and effective. I also want to thank all submitters, including consumer advocates, financial mentors, industry bodies, dispute resolution schemes, iwi, community organisations, and individuals, for taking the time to share their perspectives and lived experience. As the House will be aware, this bill forms part of a broader financial services reform package by this Government. This bill’s purpose is focused and clear: to strengthen oversight of financial dispute resolution schemes and to ensure these schemes are governed and operated independently and effectively in the interests of consumers. The bill achieves this by improving Government oversight of the schemes’ independent reviews and providing a regulation-making power to set minimum governance requirements for scheme boards. The Finance and Expenditure Committee has recommended that the bill be passed with one amendment, and I want to briefly explain that change and why I support it. During submissions, several submitters raised concerns about how the new regulation-making power relating to board independence from financial service providers could be interpreted. In particular, there was concern that the provision might imply that there can be no industry representatives on a scheme board. In response, the Finance and Expenditure Committee has recommended amendments to clause 11 so that its regulation-making power focuses on requirements to ensure independence of the board as a whole. This clarification better reflects the policy intent of the bill. For example, it enables future regulations, if required, to place limits on the number of industry representatives on a board while still allowing boards to retain a mix of skills, experience, and perspectives. Importantly, this amendment does not mandate new regulations, nor does it remove the ability for schemes to benefit from industry expertise. Instead, it ensures the regulatory power is better targeted, proportionate, and flexible. I also want to acknowledge that many submitters, particularly consumer advocates and community organisations, expressed broader concerns about the operation of the financial disputes resolution system. Some submitters argued the system does not yet go far enough. Others called for more fundamental reforms, such as consolidating the existing four schemes into a single entity or extending dispute resolution coverage to debt collectors. While those matters are outside the scope of this bill, I want to be clear that these perspectives have been heard and have been carefully considered. This bill is deliberately targeted. It focuses on improving oversight governance and consistency within the existing legislation framework. The strengthened independent review process, combined with the enhanced reporting and clearer governance expectations, will provide better information and scheme performance and help inform any future policy decisions. In closing, this bill strikes the right balance. It strengthens oversight and accountability, protects the independence of dispute resolution schemes, and improves confidence in a system that many New Zealanders rely on when things go wrong. With the improvements recommended by the Finance and Expenditure Committee, I am confident this bill will deliver meaningful benefits for consumers while maintaining a fair and workable system for providers. The Government has a comprehensive package of financial service reforms. This bill is an important part of that package. I look forward to support across the House. I commend this bill to the House. ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to. ARENA WILLIAMS (Labour—Manurewa) (14:22): Thank you, Mr Speaker. Labour supports this bill, the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. It does make some of the changes which were identified in the 2022 Ministry of Business, Innovation and Employment (MBIE) review of the four schemes and the way that the system as a whole was operating. We support those moves to improve the quality and consistency of financial dispute resolution. And we also support making sure that consumers can have confidence that complaints are dealt with fairly and effectively, even if this is one of the few changes that is being given effect to in that review. The legislative history of this is relevant. When the Minister says that a consolidation of the four schemes was outside the scope of this bill, he’s right that it’s outside of the Cabinet decisions which were made in 2023, 2024. But to say that they’re outside the scope of this bill is not quite right. This bill could have amended the way that the consolidation of the schemes would work and go forward. It could have created regulation-making powers which would bring the schemes into line with other jurisdictions we like to compare ourselves to, like Australia. It’s important that we know what this bill does, which is good, but what it doesn’t do, which is also still important to maintain some focus on. We will test that in the committee stage. It’s also important to flag with the Minister, at this point, that there are a number of amendments which continue with not only things which have been identified by MBIE as priority areas and within his own set of advice that he would have received when undertaking to present this bill to the House in its second reading; there are also amendments that have been called for by submitters, particularly like the financial mentors FinCap organisation and the consumer advocates, who consistently presented to the select committee that there is a real need for further consumer protection measures. If the Government wants to hold true to its promise in its own public comments about this bill, then it needs to continue to advance the position of the workability of these schemes. We do support stronger oversight of the governance arrangements within this bill. That is a good thing. It is a good thing for the regulations to be able to take that into account. But in 2022, and before that, when the Government consulted on the effectiveness of the financial dispute resolution system, it received a very clear message from the entities that it consulted with. Those were the financial mentors and the community organisation, particularly—but also the schemes. Not one of the four schemes came along to the select committee and made a clear case, or would defend a clear case, for why there should be four different schemes. No one in the system, no single actor within the system, or any of the submitters came to the committee and said, “It’s good that there are four schemes. We want four schemes.” The closest anyone came to that was one service provider who observed that there might be a case for having two—maybe one more than one, because if one isn’t acting properly, then we have a system in the market that doesn’t work. But all of the submissions on this point were about the need for streamlining and consolidation. I’ll give you the example of how this works. For someone who has a dispute with their financial services provider—we could be talking about large banks, but only up to a certain cap, and I’ll get to that in a minute. There is a cap of, I think it is, only up to $250,000 for the total costs of the dispute—or other financial services providers like loan makers in corner stores in town centres or payday lenders or lenders who are lending on car loans. For someone to be able to bring a complaint against the person who wrote that loan for them, they have to first go on to the website or call up the provider of that loan to find out which scheme provider they use. In some cases, if that, say, car loan lender has gone bust, then they will need to be looking at historic documents, and then they will need to bring a complaint to that provider. Hopefully, it’s one of the two providers that has extensive provisions about what happens if the loan writer has left their scheme. Because every one of the four schemes has a slightly different rule about what happens if the loan writer has fallen over and become not a member of the scheme or has joined another scheme, because then the consumer is in quite a pickle about how they might raise disputes at all, let alone through this way or through the courts. It is also important to understand the context. If we didn’t have these schemes, we’d be relying on the small claims tribunal or the courts. Those are very inefficient mechanisms for consumers to seek redress because they are extensive. But they are also time consuming and paid for by the Government. To have schemes like this is an efficiency measure for the Government, because it spreads costs of the actual disputes on to the providers of these services and incentivises them to do as well as they can. Without having an effective mechanism to do that, we socialise all of the risk and reprivatise the profitability of offering those services in a way which is not always clear to consumers in terms of how to raise issues when things go wrong. I want to put on record my thanks FinCap for their advocacy around this. This will never be the top of the priority list for MBIE, but they have consistently advocated over many years, beginning, really, around 2016, when this was first reviewed and many of the findings were the same. That things like the caps for people to bring a dispute, even in 2016, were in question. The financial value of $250,000, at that time, is now more like $400,000 into today’s terms. But that is not something that has been changed here. It creates a gap in the law where disputes under a financial service that are greater than the value of $250,000 but less than the value of $400,000—it’s unclear whether you’re meant to be raising that in the High Court or not. It is something that could have been changed in this. They’ve also been raising consistently the opportunity for confusion, consistency, and barriers to access through the existence of these four schemes. They came to the committee and gave an impassioned submission about what it is like for financial mentors to be working through these issues with a client. They can spend nine, 12, 20 hours of their time in a week just trying to help one client resolve a dispute with a financial services disputes provider. That is a system which was designed to speed up these complaints, not slow them down. The disputes providers do so on behalf of, and for the benefit of, the loan writers. That’s the intention of the system, and yet FinCap are raising these real stories of just how impenetrable the bureaucracy can be with some of these more complicated cases. It’s worth noting that the Government was presented with an opportunity to simplify the system in the work that the Ministry of Business, Innovation and Employment had done in 2022 to 2023. There were options. These were taken to Cabinet as part of the commerce reforms. Ultimately, it’s a one-paragraph recommendation from the Minister at the time to his Cabinet colleagues that simply recognised that this was a big piece of work to take on. Yes, it is a big piece of work to take on. To do one piece of what is about 12 to 20 recommendations is good—that’s why we support this bill—but we have to know that we have left some of the things which are critically important to people being able to access fair and suitable credit for their needs. This goes alongside things like unfair contracting terms. We know in New Zealand that there are surprises in contracts for people who enter into consumer debt arrangements. We know that in other jurisdictions like Europe and like the UK, consumers with consumer debt contracts have much better protections about surprise fees and especially fees that actually really look like penalties for people unsuspecting of that kind of conduct. We want to be a jurisdiction where consumers can rely on the law to protect them. There should be these sorts of provisions in our law on this hand, which there are not, but there should also be systems where they can raise disputes where the law is on their side. Our provisions fall behind that of something like Australia, so we need to keep working on this. Finally, I want to talk about how the experience goes for users of the four schemes: the Banking Ombudsman Scheme, the Insurance and Financial Services Ombudsman, the Financial Services Complaints Limited, and the Financial Dispute Resolution Service. Those are people doing their best with limited resources in office buildings. It is not their fault that they are not able to process the number of complaints and the number of complaints are growing. What is the case is that they’re not able to streamline between themselves. Often they have to go back and forwards between each other. And there is a significant amount of resource spent on just getting the settings right so that people know who to go to. The Government could have improved this. The Government should improve this, because, ultimately, the alternative through the courts costs us all. There is more work to be done here, and I urge the Government to continue to do that. RICARDO MENÉNDEZ MARCH (Green) (14:32): Thank you, Mr Speaker. The Green Party is supporting the second reading of the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. On the whole, we think this bill does move in the right direction. We do question, none the less, the use of urgency to go through the potential remaining stages of this bill, when the legislative procedures of this bill have actually occurred for quite some time. We could actually have finalised this bill ages ago. We still have time, as I understand it, before the commencement date, for it to do so. So I think it’s unusual that we are finding ourselves in urgency to debate the second reading. But I wanted to first of all talk a bit about my personal connection to the matters in this bill. Before being a member of Parliament, when I worked at Auckland Action Against Poverty on the front lines, supporting people on the benefit to access their legal entitlements, we specialised in understanding another piece of legislation and its impact on everyday people, which was the Social Security Act. But the reality is the people that we served often also needed different ranges of support. They needed financial mentors from organisations that would provide support for them to actually then engage with the very same institutions that this bill is trying to address and to allow the Minister to carry out reviews on. So I recognise the complexities that financial mentors across the motu face when having to engage with these four main institutions. I want to acknowledge particularly the members of the Finance and Expenditure Committee, who partook in this debate and heard from submitters, including consumer advocates. In this case, I want to acknowledge FinCap’s submission. I do want to traverse a bit from what they touched on, because FinCap is an organisation that does really important work. I’ve had the pleasure of connecting with them since before being an MP because of what I just described earlier. They talked about the realities that in the course of their work, the financial mentors interact with different financial dispute resolution schemes. They often talked about how they’ve reported that there are systemic issues with layman accessibility and consistency and quality across the four financial dispute resolution schemes. FinCap was clear that as it stands right now, people have big barriers when it comes to being able to navigate the different services that these four schemes cover. They also noted that consolidating them would actually bring us more in line with other countries. I note, as the previous speaker, that there is an opportunity to potentially, in the next stage of this bill, amend it so that we actually can move towards that consolidation. What they noted is that in the current status quo, this is actually taking a lot of time from those four big institutions to, basically, talk to each other, but it actually also ends up costing time for those very same financial mentors and everyday people who are trying to just navigate a system when they’re having to go through a financial dispute resolution. One of the things that FinCap also urged the Minister on or sought more clarity on is whether the Minister should, basically, conduct—well, they were calling on the Minister to conduct an immediate review of all proposed schemes under the powers that will be granted on this bill. I think this is worthwhile, if the Minister does not support an amendment to consolidate them all. I think this is also important, because one of the things that FinCap also noted in their submission—I didn’t get to personally participate during their submission, so I’ve been sort of covering what they’ve brought to the select committee—is that they raised concerns that the bill itself doesn’t signal any time frame for the Minister to act on the changes and commission independent reviews or form regulations on minimum standards for governance. What they noted is that once this bill passes, they would hope to see that these powers are immediately actioned upon assent, and that the Minister conducts an immediate review of all proposed schemes by the same independent reviewer and that there’s certainty that this will happen at least every five years. There’s also—and I want to quote—“immediate consultation from officials to establish the regulations needed to ensure financial dispute resolution schemes are governed in an effective and independent manner.” Now, I wanted to also touch on sort of the broader ecosystem that this bill covered. Something that FinCap also noted in their submission—and, once again, this is something that I think is about how the provisions in this bill, the matter in this bill, ultimately interact with people’s everyday realities—is that right now most everyday people would not have the technical expertise to navigate this kind of system. Many of them, particularly if they’re already struggling, say, on issues like poverty, maybe the burden of debt, maybe the toxic stress of just living in unaffordable housing and having caught themselves in financially stressful situations, they rely on financial mentors. What we do have is FinCap saying that we need to strengthen the support and the funding on those very same institutions like, for example, community law centres, to ensure that they’re very well resourced to carry out their functions to be able to support people to navigate those very same systems. I think this will be particularly important if the Minister in the committee of the whole House stage does not support amendments to consolidate these four institutions into one. Because so long as we have four different institutions, the reality is that organisations like community law centres will end up having to spend far more time, far more energy, and therefore far more resources to be able to support people to navigate these different institutions. I think, at the end of the day also, there will be more resources spent on those institutions connecting with each other and communicating with each other to actually ensure that people are adequately placed to be supported. So, again, this is something that I think, in the committee of the whole House, I hope the Minister can address, because I also would like to make sure that we use that opportunity in the remaining stages, which I would assume will very likely happen today, unless the Government decides to, say, finish urgency after the second reading, which they’re more than welcome to do so, because I think that would be the democratically responsible thing to do. [Interruption] But I can tell from the heckling on the other side that perhaps it won’t happen. The heckling on the other side also tells me that this Government, actually, through its record use of urgency, potentially, will likely just continue to rush through the remaining stages of this bill. As I’ve mentioned earlier, the Green Party does support this bill. There are elements of this bill that are really commendable. But I think, again, the use of urgency is kind of not really justified, or hasn’t been justified by the Minister. So I would also invite the Minister, in his remarks—whether it’s in the committee of the whole House or in the third reading of this debate—to at least present to the House why he believes that the use of urgency for the remaining stages of the bill is justified. That is something that I don’t think has been adequately addressed by the Minister in this debate. The other thing that I wanted to note is that the select committee who evaluated this bill did consider amendments and did end up proposing amendments around, basically, the independence of that board and ensuring that the independence of the board is paramount. I think that’s important. I think it’s interesting that based on the report from the committee, the main group that was raising concerns about being, effectively, locked out was the New Zealand Banking Association. I think where we’ve landed may need a new position. I think this is something that is worthwhile exploring again in the committee of the whole House stage. But I want to finish off, ultimately, by acknowledging that the real burden of the components of this bill, and also the ones who will be eagerly awaiting the Government’s signals around the time lines of the reviews and the scope of the reviews that may happen under the powers of this bill, will be the organisations that, ultimately, are serving people most affected by issues around the unsustainable debts and poverty of people who may find the process of these disputes a matter of being able to be financially secure otherwise. So I don’t want to disconnect, again, the sort of more technical nature of this bill from the everyday realities of people who ultimately engage with the likes of organisations on the ground who navigate with the main foreign institutions. The Green Party will be engaging in the committee of the whole House stage. I have seen already that there are plenty of amendments being proposed, and I’ve noticed, particularly, that the member Arena Williams has put quite a few amendments. We look forward to evaluating those, getting behind those amendments. Ryan Hamilton: Changing one word—really meaningful. RICARDO MENÉNDEZ MARCH: I hope that whichever random member on the other side is heckling about the amendments engages with them too, and perhaps he may want to consider having a quick focus group chat and conversation to see if they would be inclined to support any of these amendments moving forward. The Green Party commends this bill to the House. LAURA McCLURE (ACT) (14:42): Thank you, Mr Speaker. I rise in support of this bill. Isn’t it slightly ironic that the previous speaker, Ricardo Menéndez March, wanted to make a point around the use of House time, yet we’re about to head into the committee of the whole House stage, where there is, irresponsibly, close to 200 amendments that don’t actually do anything. So that’s kind of ironic. We’re here for the long haul. Had a bit of a field day yesterday and I was out, so I’m refreshed and I’m ready to go. I commend this bill to the House. Dr DAVID WILSON (NZ First) (14:43): I speak on behalf of New Zealand First on the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. I have personal experience of some of these things—in particular, the Banking Ombudsman—and I am of serious belief that at the time that my complaint went through, it was too heavily industry-focused. But I note, since then, that they’ve moved far more towards independence. So I’m pleased with the progress so far and I am encouraged by this bill. I commend it to the House. Dr LAWRENCE XU-NAN (Green) (14:43): Thank you, Mr Speaker. Like my predecessor, one of the previous speakers, Ricardo Menéndez March, said, we do support this bill, but I think there are a few important areas that I want to pick up on from his contribution. We do look forward to the committee stage of this bill. I think, for me, one of the most exciting parts—and it will not come as a surprise to anyone, but I love a good clause around regulatory-making powers, particularly when it comes to secondary legislation. I’m sure any members here who are on the Regulations Review Committee, including the chair, Arena Williams, and deputy chair, Nancy Lu—I’m really hoping that they will take a call on this and discuss some of the nuances when it comes to RMP or regulatory-making powers. That particular part is an important part because one of the things, starting with that—and, you know, I do commend the Minister for responding to what was discussed around the regulatory-making powers as a result of the letter from the Regulations Review Committee, particularly around the elucidation of clause 11 of the bill amending section 79 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. So I think some of these around the requirements for members’ knowledge, expertise, and skills, and also disqualifying a person, is important. I also note that this is something that some of the submitters, particularly from the banking sectors, raised questions about as well. So this is something—just to signal to the Minister—that we will be looking into as a part of the committee of the whole House stage of this bill. I want to talk about the broader context of this bill. Again, this is part of, I guess, a package, a saga, of bills around the reforms with financial services regulation. This particular one is to do with financial service to retail customers, which includes banks, insurance lenders, and KiwiSaver providers. I think there are two areas I want to pick up on, both from what the previous speaker, Arena Williams, and also Ricardo Menéndez March, mentioned. Part of this is that, currently, there are four schemes—the Banking Ombudsman scheme; the Insurance and Financial Services the Ombudsman, the Financial Service Complaints Ltd, and the Financial Dispute Resolution Service. That’s a lot, and it is incredibly complex. While many people will be familiar with banks, insurers, and KiwiSaver providers, I think that lenders is an area that deserves some specific attention, particularly when we’re looking at things that could be extended to the likes of loan sharks, etc., because those are the people who potentially would be struggling in various ways. Ricardo Menéndez March has mentioned his work with Auckland Action Against Poverty. We were looking at places like the South Auckland community, who are constantly being bombarded by advertisements for things for them to borrow more and, increasingly, having the need to go to loan sharks and lenders, etc. Something around this particular dispute resolution scheme and the way that those communities are often being taken advantage of is a really important aspect and deserves some close scrutiny when we’re looking at this bill. On top of that, one of the things that I disagree with, I guess—and this is an area where I want to commend FinCap for raising awareness of the fact that those four schemes need to consolidate into one. I am disappointed that the select committee didn’t take that on board. However, I am looking forward to the Minister accepting—I’m sure—one of our amendments that does consolidate all four into one. In one of the recent bills we were looking at—the saga around the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, and precisely consolidating three supervisors into one to ensure that there is some sort of streamlining process and reassurance for the market. They were the Reserve Bank of New Zealand, the Financial Markets Authority, and the Department of Internal Affairs. The Minister in charge of the committee stage at that time specifically mentioned how this would allow some of the duplicates when it comes to the way they’re looking at it, without making an impact on their expertise. You know, that is waiting to be said, too. So I disagree with the fact that—for example, the Banking Ombudsman, of course, in terms of their own personal interest would not want any sort of consolidation, but I do think that it is needed, particularly for consumers who may not understand the complexity of four schemes. We support this bill and we’re looking forward to the committee stage. RYAN HAMILTON (National—Hamilton East) (14:48): It’s a streamlined bill that takes it from four dispute resolutions into one. It makes a lot of sense. The Opposition supports it and criticises us for going into urgency, and yet, ironically, the Opposition whip will change words from things like “maintenance” to “continuation” and “reorganisation” to “readjustment”, such is the value of what they think and the importance of this House. I commend it to the House. Hon Dr DEBORAH RUSSELL (Labour) (14:49): Thank you, Mr Speaker. This is, in some ways, a small bill. It deals with the sorts of issues that sometimes don’t really get before this House in terms of financial matters. When it comes to bills that are in front of the Finance and Expenditure Committee, often it’s tax bills or high finance bills or bills with big entities that come in front of us. You know, top lawyers, top advisers, top accounting firms, and some of the biggest entities in New Zealand come and speak to the Finance and Expenditure Committee. For that reason, it can be a deeply interesting committee to sit on. This particular bill deals with a group of entities, of schemes that are set up in order to help the everyday people of New Zealand. The ordinary people. The people who don’t necessarily have easy access to expertise, to highly trained lawyers, to sophisticated analysis. I guess I’m speaking like this because my first connection as a member of Parliament with some of the issues around consumer credit, consumer credit contracts and banking issues and so on, was dealing with a wonderful Pasifika man who was in real financial trouble. He was in real financial trouble because of a car that he had bought from a local car yard in New Lynn. The car was a bit of a dog, really; that’s probably being rude to dogs. It was a lemon, and yet he’d signed up to a finance contract for it, and the finance contract rapidly became very onerous. My electorate office team and I were trying to help him. Through that, we made our way into developing an understanding of all the various financial advisory services: the counselling services, the budgeting services that are available for people, and then, through that, to the difficulties that many of them had grappling with the various dispute resolution schemes that are available. It’s not that it was hard to deal with the dispute resolution schemes—they did their job—but it was difficult to work out where to go, who to be talking to, and how to solve the problems. Now, in that particular case, we did end up with a reasonable resolution for our constituent, but there are cases that continue to come to our attention. So, there’s been a real need for reform of this law and there’s some of that reform that’s done under the credit contracts consumer audit. There’s various bills that are going through at the moment or have gone through. This one is an interesting one because it deals with the services that ordinary people rely on to get some resolution from financial service providers. But the schemes themselves are confusing. There are four schemes. There is the Banking Ombudsman Scheme, the Insurance and Financial Services Ombudsman Scheme, the Financial Services Complaints Ltd, and the Financial Dispute Resolution Service. Now, in the committee stage of this debate—I’m going to give notice to the Minister now so that he can perhaps have a word with his officials—I’m going to ask him to tell me what each of those schemes does, how they differ from each other, and where they overlap. That is the problem with them: in some ways they are different; in some ways they overlap, and how is the ordinary consumer to know where to go to get some kind of resolution of their issue? So, fair warning, Minister. I don’t want to spring that question on you unawares. I’m giving you an opportunity to consult with your officials. I trust they’re listening along and they’re scribbling down those notes for you right now. This is why one of the things that we need to do in this area—and it is not done by this bill; it’s a shame that it hasn’t been done, but we do need to look at some kind of, I think, consolidation of these schemes, some kind of streamlining, and some kind of work to make this landscape easier for ordinary New Zealanders to navigate. So having said that—some of the stuff that this bill doesn’t do—we are, nevertheless, supporting this bill, and we’re supporting it for good reason. It’s good work. It’s part of a stream of work that has gone on under Governments for 10 or 15 years. It’s always the stuff that’s been happening. There was work being done on it under the previous Labour Government, I think, right back in my first term. It has continued: this work was being done under the second term of the Labour Government and it’s been picked up and continued by Ministers in this term of government. So when people say, “Why doesn’t Parliament agree on anything?”—well, actually we do. Sometimes, there are streams of work that just continue, steadily, under Governments of various colours. It’s not work that begins afresh with every Government; it’s work that is picked up and continued. We are glad to see that this work is continuing under this Government as well, and I guarantee that, after November, we will continue the work when we are in Government, gentlemen. So do not worry. Your work won’t all be lost. I do want to talk about some of the issues that are sitting within this bill. The primary work that this bill does is to set up a series of reviews of these four different schemes. It says that the work of the bill is that the Minister may require reviews of these schemes and it has to be an independent review, it has to be signalled in writing. There’s various rules as to who has to do the review, and so on, and what the terms of reference are. It’s all done with a little bit of consultation and thinking about it. The Minister, I think, can require the review, but he or she must do so at least every five years; I think I’ll need to check that as we go through. So it’s a way of setting up an ongoing review process for these schemes. Again, we agree that that is a good move. It is something that is worth doing. It is useful to get that regular feedback from independent and expert reviewers as to the quality of the work that is being done by the schemes. We would hope that where those reviews point out concerns with the schemes, they will, in due course, come up with, I think, a better solution than four independent schemes. I do think that needs to be a focus for Government. This is a good move, it’s good work, it’s getting stuff under way; let’s hope that, over time, as successive Governments deal with this area, it does result in some kind of consolidation of these schemes. That would, surely, be very helpful to everyone. Getting back to this issue of consolidating the schemes, I think part of it, too, is we have the Banking Ombudsman Service on there, but, of course, banks offer multiple services these days. They offer insurance services as well. So what do you do with your insurance services? Are you going to go to the Banking Ombudsman or to the Insurance and Financial Services Ombudsman? It’s not immediately obvious, and that, I hope, is one of the things that these reviews will set up and do. I think the select committee did some really good work. I can’t remember when we started on this work and whether it was when Stuart Smith was chair or when Cameron Brewer became chair—of course, we now have an excellent chair in Ryan Hamilton. Hon Members: Aw! Hon Dr DEBORAH RUSSELL: Ha! Nothing like a bit of shade. We did some work on the independence of reviewers and the independence of the various boards and things that are involved in this. I think that’s an important point to note. We want people who are expert in financial services but not involved in financial services. That’s going to be a hard thing to come up with, but we can presumably at least get some work done in there to ensure the independence of those who are set up to review the schemes. So an interesting piece of legislation. A piece of legislation that we think is worth supporting; a piece of legislation where we will be examining what is going on in detail as a committee of the whole House; and a piece of legislation that, perhaps, is not quite as full as we would have liked, but nevertheless, it is worth supporting. So with that, [Next speaker stands up]—and I’ve got two seconds left, Mr Bidwell; you’ve done this before. Dan Bidois: This is a good bill and I commend it to the House. ASSISTANT SPEAKER (Teanau Tuiono): Dan Bidois—once you get the call. DAN BIDOIS (National—Northcote) (14:59): This is a good bill and I commend it to the House. REUBEN DAVIDSON (Labour—Christchurch East) (14:59): Please, alert the media. Dan Bidois’ speech ran to four seconds, but it was because he said it twice. I have developed a habit now, when Dan Bidois goes to stand, I stand. And it’s not about me being slow to rise; it’s about him being so fast to sit back down. I would like to get to the subject matter at hand: the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. Now, it’s very important—it’s a very important bill. And it’s also very important that when we’re talking about resolution, we’re talking about it being independent, we’re talking about it being accessible, and we are also, very importantly, talking about it being fair. That’s what we’ve heard in a lot of contributions from this side of the House. It is that experience that we’ve seen without our constituents, with people in our communities, needing clarity and clarification around the fairness of a resolution scheme that operates with financial service providers to ensure that, where things have gone wrong, individuals who have found themselves in, often, difficult financial situations can access advocacy and resolution services that allow them to be, I would hope, on a level with the very large organisations or the very powerful organisations or companies that they are sometimes navigating with. Committee stage will allow us the opportunity to fully and wholesomely examine this, because it does need to be examined. One of the points that I wanted to look at specifically and draw attention to and something that I think we need to ask some questions around is in the bill, where it speaks about the Minister, this is new section 67B(3), inserted by clause 7, “The Minister may appoint as the reviewer any person who, in the Minister’s opinion, has the appropriate knowledge, skills, and experience to carry out the review.” There’s a concern here that what could happen is a really high level of decision-making power sitting with the Minister, a lot of discretion sitting with the Minister. Much as it’s been remarked on, the transformational change experienced at the Finance and Expenditure Committee, with the transition from one chair to another, as has happened in recent weeks, the same can happen when there is ministerial change. So if you are looking for certainty, and—very much, certainty is what people in our communities, constituents in our electorates, deserve and need so they can have certainty that there will be independence, that there will be accessibility, that there will be fairness in the resolution schemes and services that exist to help them through the dispute resolution process with financial service providers. The risk, if it is simply down to the stroke of a pen from a Minister around who is appointed into that role and how those reviews are carried out—it does put a lot of power with a single Minister. It does make that potentially very volatile. That’s a trend that has often been remarked upon as being one of the signatures of this current Government, is placing a lot of power with single Ministers who are then, ultimately, able to make some fairly big calls across a number of portfolios and on a number of issues without having the appropriate checks and balances in place. But, more importantly, destabilising a lot of sectors in New Zealand and a lot of communities that we hear from are concerned that they don’t have the certainty any more because the responsibility sits with a single Minister and it depends, potentially, what day of the week it is or which way the wind’s blowing, as to what that Minister will want to see happening. I’m looking forward to the committee stage to really challenge members opposite to see, beyond these tweaks, what more will you actually do to protect individual consumers with a dispute resolution service that is truly independent—and so that comes back to the potential for ministerial influence—that is truly accessible, and that, ultimately, that is fair. That is what people need to know: that the dispute resolution is fair. NANCY LU (National) (15:04): I stand to commend this bill to the House. It is about streamlining and making things easier for New Zealanders. That’s what the National Government is doing: fixing the basics and building the future for all New Zealanders. DAN ROSEWARNE (Labour) (15:05): Thank you, Mr Speaker. I rise to speak on the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill at its second reading. Just to remind the House of where this bill fits, because it fell down the back of the Government’s couch some time last year, and they announced their Budget and that was a little bit of a fizzer, a little bit of a disappointment. And they thought to themselves, “Well, what are we going to do now? We might as well find some bills.” So, they dug deep down into the back of the couch, and they found all the rats and mice that they had piling up and brought this bill before the House. So here we are today. This package is part of three bills. The Credit Contracts and Consumer Finance Amendment Bill—and that’s what we heard our third reading on earlier in the day. Then we had the Financial Markets Conduct Amendment Bill. And then we have this bill: the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. I don’t usually sit on the Finance and Expenditure Committee. It’s a fantastic committee, actually, the times that I have subbed in on it. I’ve been very impressed by MPs of all sides of the House, really, navigating the legislation and things like that. It’s been fantastic. But just rehashing the contributions today, the Minister started out by talking about those free, independent options that several submitters highlighted. That’s particularly important around clause 11, because it provides that the board—and we need mixed skills on all boards. That diversity is very important, and they bring a whole range of different perspectives. For something as important as this, we absolutely need that. My learned colleague Arena Williams said that this bill could have consolidated the schemes a little bit better in how they work. So, it would be good to panel beat that aspect of the bill as we go through committee of the whole House. It’s also interesting that no actors or submitters said that they wanted four schemes. Some wanted two. Some definitely wanted it to be simplified. So that’s particularly interesting. And also, around the amount of hours with clients—10, 12, 20 hours per week to address client concerns. Again, that is definitely something that we can flesh out during committee of the whole House. I particularly like Ricardo Menéndez March’s contribution. He highlighted his personal connection to this bill on the coal face, assisting people and the challenges that they face in our community. I think it’s really important to remember that this bill works for all Kiwis, and we need to make sure that it’s suitable for everyone, no matter where they are living and the circumstances that they find themselves in. That leads on to Dr David Wilson. He touched on a complaint that he was navigating. So that actually highlights that anybody can be faced with a challenge and they might have to go through the jungle gym of actually trying to go through the dispute resolution process. It doesn’t matter who you are. You might end up in this situation where you might have to weave your way through the system. Of course, Lawrence Xu-Nan—always love his contributions. He named these bills a “saga”, and they absolutely area. Especially around communities—our vulnerable communities that are bombarded by advertising from loan sharks and that more predatory aspect of lending, insurance, that kind of thing. It’s very important that our legislation is fit for purpose, to make sure we keep those more malicious actors at bay. And, of course, Dr Deborah Russell made the point that people that usually present at our select committees usually have a high profile. They’re usually top-end lawyers, senior officials, and they bring with it a certain type of perspective. Often, the people in our communities are always the ones that provide their views, so it’s very important that all of us get out into our communities and we make sure that we have those connections. In the Waimakariri in particular—Mr Doocey would know this very well—we have some fantastic people in our community that— Tom Rutherford: That’s his doppelganger. DAN ROSEWARNE: I won’t lose my train of thought there—but it’s very important that we do— ASSISTANT SPEAKER (Greg O'Connor): If you can survive through that, that’s pretty good, actually. DAN ROSEWARNE: Yeah, ha, ha! But we do, we maintain that connection with our communities and those people on the ground that are doing that fantastic work to make sure that our vulnerable in our communities are able to enter the system and address their concerns around dispute resolution and things like that, particularly around car dealers too. I was actually quite surprised at how easy it is to, you know, walk into a car dealer—you don’t even have to pay a deposit in a lot of cases, particularly a young person, and they could be going away with a three- or five-year loan for an asset that depreciates. If that car breaks down, they’re short on cash. Maybe they start reading the fine print—you know, what the large print gives, the small print takes away. You read that fine print and you realise that the deal that you thought you got wasn’t necessarily the best deal. People usually enter these situations unexpectedly. As mentioned, Labour will be supporting this bill. We’re doing so carefully, because this is one of those pieces of law that most people will never read, but they will absolutely feel it when something goes wrong. This bill is about trust, and it’s about whether everyday New Zealanders can trust the system when that financial service lets them down. As mentioned, most Kiwis don’t have a lawyer on hand; most Kiwis aren’t going to take a bank or an insurance company to court. They rely on these dispute resolution schemes to sort things out for them, and most schemes do exist so people can get a fair hearing without spending thousands and thousands and thousands of dollars. So, you know, if you have a couple signing up for insurance, they think they’re getting a good deal, they might have gone through the paperwork, signed each page, and then as soon as they put in the claim, they realise, oh, hey, they’re not covered for the things that they thought they were going to be covered for, and they feel stuck, they feel frustrated, and they feel like they’re going up against a system that’s bigger and more powerful than them. That’s the moment where our dispute resolution schemes really matter. They’re meant to be that place where people can go and get heard properly—doesn’t matter what walk of life you come from. So that’s why the system has to work and it has to be fair. This bill makes some changes to how that system operates. It gives the Minister the power to decide how and when independent reviews of these schemes are carried out and who carries them out. Those reviews will still happen at least once every five years. The bill also allows regulations to be made about who sits on the boards of these schemes, and it sets expectations around their skills and their experiences and their independence from the industry that they’re overseeing—and that’s particularly important with that clause 11 as well. So, on the face of it, yep, these seem like sensible changes. Better oversight is always a good thing, clear standards for governance are always a good thing, and most people would expect that the people overseeing complaints about financial providers are properly qualified but not too close to the industry. If you think about that in simple terms, it’s a bit like a referee in sport: you don’t want the referee too close to one side. Yeah, rugby’s a good analogy. Last night, the Crusaders beat the Hurricanes 47-14; it was a fantastic win, so I thought I’d put that in. But, again, you don’t want that referee being too close to any one side. I know the rest of New Zealand— ASSISTANT SPEAKER (Greg O'Connor): That’s coming close to out of order, Mr Rosewarne. DAN ROSEWARNE: Ha, ha! Well, you know, everyone outside of Canterbury blames the ref when the Hurricanes win, but it’s all right. But hey, the same principle applies here. This is where this side of the House looks forward to asking those hard questions during the committee of the whole House stage, because this bill also puts more power into the hands of the Minister. The Minister can set the terms for reviews and appoint a reviewer. So we just need to make sure that these reviews are genuinely independent. For that reason, I commend the bill to the House. TOM RUTHERFORD (National—Bay of Plenty) (15:15): I was going to commend the member Dan Rosewarne for his contribution, and then he brought up the Crusaders, and it went down very quickly from there. But it’s good to see some collegiality across the House. We’re a Government focused on fixing the basics and building the future. Dr Carlos Cheung: Mr Speaker—Mr Speaker! GLEN BENNETT (Labour) (15:15): Kia ora, Mr Speaker. Dr Carlos Cheung: Aw! I’m much faster. ASSISTANT SPEAKER (Greg O'Connor): Te Pāti Māori call, five minutes. GLEN BENNETT: Just like a sports game— ASSISTANT SPEAKER (Greg O'Connor): It’s on speed, not sound, actually. GLEN BENNETT: Thank you, Mr Speaker—just like a sports game, right? The fastest always wins, which was not normally me because I was really bad at sport, but anyway, I digress, and they’ve already drifted off the bill—Mr Speaker, I will name the bill so you don’t make me sit down—the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill. As we’ve heard through the contributions this afternoon and from the Finance and Expenditure Committee and previously in the first reading, the aim of this legislation is around improving outcomes for consumers. Now, does it go far enough? Well, maybe not, but it is what it is; it is where it is, and that’s why we are going to support it, because if it is about improving outcomes for consumers, then we are in, because we want to stand up for people in our communities and make sure that they’re looked after. We’ve heard a few examples this afternoon about who this legislation is for, and, again, I want to reiterate in terms of within my community and the people in my life over many years. One of the issues we heard about a decade or so ago, or a bit longer, actually—probably 15 years ago—was there was a bunch of Auckland second-hand car dealers. They had a scheme, and they would come to New Plymouth, they would come to the community I live in—there were some communities they wouldn’t come to, for some strange reason, but they came to my community and they would go doorknocking and they’d drop leaflets. They would have these leaflets and they’d doorknock and they’d say, “Have we got a deal for you—have we got a deal for you. Not only do you get a new car, but we fly you to Auckland, we take you to the car supermarket, you walk the lot, and at the end of that visit, you get to sign on the dotted line and you get to drive your new”—you know, a second-hand, as-new—“car back to New Plymouth and live happily ever after.” Carl Bates: Why didn’t you buy your car locally? GLEN BENNETT: Did you not hear the start of my story, Mr Bates? Again, the reality is it isn’t actually funny; it’s not being silly, because it actually is—and they were examples in my own neighbourhood of the fact that they bought into the dream. Yes, there was small print. Yes, there were things that they should’ve read and should’ve understood. But “Have we got a deal for you? We fly you to Auckland, and you can actually have a car to drive your family around the city to get them to school, to get them to sports, to get to the supermarket to pick up the groceries.”—it seems like a damn decent deal until the fine print comes along. Now, this legislation is to, hopefully, help in some of those disputes, because there were a number of them. For some, they just didn’t bother and didn’t realise they could actually go and seek help, and, unfortunately, had to continue—well, it was within the rules; they had to continue to pay back their money on their vehicles. I remember one day visiting a family and there was this half-decent car that’d been sitting on their front lawn and it was on blocks; you know, the grass was growing around it. I remember I was in the house and visiting; we were doing some stuff around budget advice and trying to get their books in order. One of the lines in their budget sheet was car repayments, and my comment to them was, “What car?”, because there was no car in the driveway; there was this car on blocks with grass growing around it on the front lawn. I said, “Sorry, you don’t have a car—I didn’t realise you had a car.”, and they said, “Oh, no, it’s the car on the front lawn.” I said, “Are you still paying for that?”, and they said, “Yeah, we got ourselves into this deal and we’re still paying it off.” a number of years after, unfortunately, because they couldn’t actually fix it, they couldn’t repair it. The point of the story is that we need to have good—we need to have decent—systems in place to ensure that consumers can go to the right places with the right people. But they have the right teeth and the right ability to be able to deal with some of the loan sharks, with some of the lenders, and with some of those insurance companies. We need to find a disputes regime that works. We will support this piece of legislation. We know it’s not perfect, but it goes a way to supporting consumers, and therefore Labour will support this legislation. Motion agreed to. Bill read a second time. ASSISTANT SPEAKER (Greg O'Connor): The Financial Service Providers (Registration and Dispute Resolution) Amendment Bill is set down for committee stage immediately. I declare the House in committee for the consideration of the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill.