Create a Seamless Commission Bill Format for Supervision

Commission bill format for Supervision

supporting this film because it makes sense effectively this bill is about trying to make sure that the interests of investors are protected and making investors more confident in financial markets by ensuring that the trustees statutory supervisors and unit trustees are capable of performing those functions perform those functions effectively and are accountable for any failure to perform those functions so it's kind of simple really and it's to be applauded introduced at the end of 2009 this bill is a continuation of the great progress that Labour made in tidying up a financial services sector including the review of financial products and providers and as a member of the Communist select committee I'd look forward to scrutinizing this some somewhat lengthy and technical bill at the stage of the Select Committee but I want to put on record that it is important it certainly not all that is required but a tick to the government for introducing it it's hugely important to build investor confidence in this country after a series the series of financial failures the collapse of a number of finance companies and the number of people who have lost their hard-earned investments and this bill follows on from the conclusion of both an IMF and world bank report in 2004 and the consultation is undertaken by the ministry of economic development in the review of financial products and providers in 2006 which found that New Zealand places too much reliance on private supervisors such as corporate trustees and that these supervisors and trustees often lack accountability so this bill the automatic right for the sixth actually appointed approved trustees to supervise issuers of debt and some investment schemes and it introduces a licensing regime regime for trustees that will be run by the Securities Commission the bill makes in an offense to act as a trustee or statutory supervisor without a license so a person who commits such an offense is liable on summary conviction to a fine that doesn't exceed $300,000 a trustee or statutory supervisor or unit trustee must hold a license that covers the debt security participatory security or unit trust to which the appointment relates and a license holder must comply with every condition imposed on the license licenses will be will ensure the trustee statutory supervisor or unit trustee is a body corporate and their directors and senior managers must be of good character this bill contains a number of provisions designed to ensure that trustees step to three supervisors and unit trustees comply with their obligations and the Securities Commission may seek pecuniary penalty and compensatory orders against those who fail to comply these clauses are designed to address the late lack of capability and accountability of supervisors and trustees in the current system as I've already said and the fundamental role of the trustee statutory supervisor or unit trustee is to ensure compliance with the terms of the trust deed or the offer of security so when an insurer an issuer gets into difficulties the trustees supervisor is supposed to take action and form the investors or engage expert assistance or place the issuer into liquidation but the finance company failures of 2006 2 2008 raised some important issues and they were the lack of capability or capacity that trustees and supervisor in complexity of the securities that they supervise week trustees the role of trustees and supervisors not being defined properly and the potential for the lack of independence from the issuer trustees supervisors are funded by the entities that they survive that they supervise also weak accountability where individual investors can take court action but this is only the only form of accountability so concerns have been respected raised and respect of similar issues relating to the performance of stumps some statutory advisors of retirement villages as well so I just want to read just to put this and give it some context to the situation that has resulted in this legislation I i want to read extracts from a couple of articles that appeared in late 2008 the first is from the sunday star times and it's titled business reality behind smooth assurances written by Greg Nana's it says that trusty companies are fond of emphasizing the trust part of their name more than the company part and this is reflected in the way that they promote themselves words such as integrity and experience often feature prominently in their promotional material and they frequently promote themselves as a board which can shelter a family from financial turmoil but if you look beneath the veneer of prudently old-fashioned values you will find a modern commercially oriented business and a core part of the activities of most trusty companies is managing family trusts usually for many years after the person who established it has died often this will involve investing the Trust's money to provide an income for its beneficiaries and trustee companies could invest this money directly into property or shares or any number of the managed funds which are available to the general public and sometimes they do but many trustees come trusty companies have also formed their own managed funds into which they can channel money that they are investing on their clients for half we are this happens the trustee company gets fees and its funds management ish montara generates also levies fees a third League of most trusty company's business is acting as a corporate trustee the law requires certain types of investment vehicles such as finance company debentures unit trusts and organizations such as retirement villages to have a trustee or statutory supervisor to protect investors interests and although the trustees powers are limited in such situations many people are questioning the value that they provide to the investing public and then the article goes on and just a brief excerpt from another article in the National Business Review and also in 2008 and August 2008 written by sarah mcdonald and fiona robertson which started off by saying in 2004 National Business Review published a double page spread titled a matter of trust detailing major concerns held by many in the finance industry about the effectiveness of trustees at protecting retail investors the carnage that has ensued since then with more than five billion dollars either frozen or lost completely in failed finance company fund or mortgage trust investments has done nothing to assuage those anxieties and their consensus among finance and investment industry professionals that National Business Review spoke to is that trustees are underpaid in some cases ineffectual and in others plain incompetent so the the point I'm making is that this bill goes a long ways we're dressing this situation but there is a lot more to be done so in closing I want to mention the work that's currently being done by my colleague the Honorable nhien dalzell previously the Minister of Commerce I was recently launched a private member's bill to better protect and vistas the illegal contracts unlawful limitations on regulators powers amendment bill will ensure that investors will not miss out on the benefits coming from a regulator taking action against an investment company that has breached the rule and the issue was brought to her attention through the ing issues where the people were forced to sign away their rights to gain any benefit from someone else taking action against ing including the regulator over half a billion dollars was stranded in the ing product funds with a lot of it representing the life savings of elderly people who continue to be angry and confused at the way that they were treated so this fool makes a move to ensure that kiwi investors get a fair deal worthy of consideration of Parliament and I hope that members from all sides of the house give it a fair hearing if it's withdrawn from the ballot and I think you've also heard tonight from my colleague the Honorable David Parker that there is also more to be done in terms of beefing up the Securities Commission to better regulate the space and not just rely on trustees and that the capital development for task force recommended reported and recommended on this and which mirrors were similar things happening in the UK and Australian so as I said earlier we support the spill Mr Speaker we don't think that that it goes far enough in terms of that there is a lot more to be done but we think it's sensible and will protect investors and restore confidence in help restore confidence in the financial sector I call jonathan young thank you mrs. figure I'm please to speed Rusty's