Speech: Reserve Bank of New Zealand Amendment Bill

This is a Bill with a primary purpose of implementing regulations for “non-bank deposit takers”.
It is an interesting concept - to even consider what is meant by this term non-bank deposit takers.
It reminds me of a long-standing discussion about the use of the term non-Maori – a term which places all the emphasis on what people are not, rather than what people are.
I have always considered it more appropriate for people to define their own identity – their own cultural heritage, whether it be as Pakeha, Tauiwi, Scottish, African or Tongan.
And so I come to this Bill, wondering how it is that we are implementing regulations for finance companies, building societies, credit unions by considering what they are not – in other words, deposit takers not of a bank.
This Bill therefore defines the default position – what these deposit takers are if they are not deposit takers of a bank.
This Bill implements the new framework which will require all deposit takers to comply with minimum prudential standards as enforced by trustees and the Reserve Bank.
Standards which in themselves will ensure care, caution and regard is taken in providing for the future.
We in the Maori Party, can think of no better goal, than to legislate for care and caution in the context of investment strategies.
Such principles would be welcomed, we know, by the lobby group, EUFA – Exposing Unacceptable Financial Activities.
EUFA has been established to stand together, in solidarity with the victims of the finance and investment industry collapse.
Their very reason for being, is to ensure that New Zealanders are given every opportunity to receive information, to apply for legal aid, to pursue multiple avenues to reach a just resolution for all victims of failed finance companies.
And so we come to this Bill, alert to their suffering, and wanting to see how this legislation will allow deposit takers to better care for and protect the finances of their investors.
Exactly just how severe this crisis has been on New Zealanders, is perhaps best represented through the words of EUFA coordinator, Suzanne Edmonds, and I quote:
“Investors lives are in total despair coupled with economic insecurity, such as losing their homes, while New Zealand sit back, watching the games and neglect by those who have a duty of care, slopping around, discrediting us all.
The Maori Party takes very seriously our mission, to listen, to hear the voices of the voiceless.
We have heard the pain of people who have taken the fall for company mismanagement.
We have heard their pleas for accountability; their collective stand to insist for compliance enforcement upon the finance industry.
We must not overlook the victims of finance collapses, including Bridgecorp and BlueChip victims.
In the Maori Party we are aware of a number of whanau whose quality of life has virtually disappeared over night.
Whanau who lack the funds to take legal action, whanau who have had to sign their homes over in mortgagee sales, simply to stay afoot.
The headlines may highlight the dollar amounts lost – the fact that thirteen firms have failed in the last eighteen months owing 61,341 investors $1.5 billion.
But what hits home the hardest for us, is the real stories of lives hurt by Hanover, victims of money managers who has mismanaged their life savings; stories of real grief.
And so we were interested in the views of the NZ Institute of Chartered Accountants to the select committee, that believed the case for a more prescriptive, heavy-handed, prudential regulatory regime for non-bank deposit takers, had not been sufficiently made.
It was their view that the collapse of finance companies is not sufficient justification, as failures are happening in other jurisdictions which are more regulated than New Zealand.
It was their view that such measures should only be used in extreme circumstances where the risk of market failure and significant harm were relatively high.
However, we cannot overlook the fact that since the time that the NZ Institute of Chartered Accountants made their submission in March this year, sixteen more finance companies have entered into difficulties (with some entering into moratoriums and some going into receivership), and eight more mortgage trusts or property funds have closed or suspended the repayment of investors funds.
Perhaps the more compelling analysis, in our view, was the advice we received from the Federation of Maori Authorities.
It was their contention, that the regulations to increase prudential standards are urgently needed to tidy up this sector, and make it more accountable to its investors. In fact, if anything, they should have been in place a whole lot earlier.
We know the reality that a lot of Mum and Dad investors, including Maori, have been investing their savings in finance companies, without realising the actual nature of the risk that they’re exposed to.
It is that long lost hope – when our families are struggling to survive – to pin our trust and confidence in finance companies as creating the pot at the end of the rainbow.
A hope which as the reports remind us is often not well placed, as these companies will not necessarily have the prudential rules and standards in place to properly protect their investors.
The common misconception is that there are standards in place, and proper monitoring, but there isn’t.
Madam Speaker, I want to commend the advocacy of groups such as EUFA who have so bravely represented the realities of those who may well have otherwise have lost hope.
We in the Maori Party will support this Bill as we believe the changes will allow deposit takers to better care for and to protect the finances of their investors.
We support also the fact that the changes allow the Reserve Bank to increase its ability to regulate, monitor and protect the New Zealand finance system and economy. Such attention to the financial infrastructure, is, we believe, important for kotahitanga of the nation.
And finally, we want – as I am sure every other member of this House would join me in - to minimise financial collapses.
We have heard the impact that the collapses have had on families and the economy and for all these reasons, we will vote in support of this Bill at its second reading.