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National MP questions avalanche of change; but promises more

National MP and finance spokesman Andrew Bayly says there has been an "avalanche" of change in financial services, but it National wins the election he will review the finance sector’s architecture and make more changes.

Monday, March 20th 2023, 6:00AM

by Andrea Malcolm

Speaking at the Financial Services Council’s Future Ready summit in Auckland, Bayly said it’s one of the first things he will do if he gets the role in October.

“I’ve been following the financial advice industry very closely. There has been an avalanche of change, and while much of it has been useful, I think we’ve got to be careful we don’t end up continuously changing the environment for people,” he said.

Bayly said legislative changes in the financial sector have resulted in a “mish-mash.”

“We’ve got a cross [over] situation where the Reserve Bank is regulating regulated financial institutions, MBIE and the Commerce Commission are regulating the Credit Contracts and Consumer Finance Act, and now the FMA is going to regulate the CoFi bill.”

Regulator scope creep and confusion was an issue for Bayly who says he was involved in submissions on the CoFi bill, which National didn’t think was necessary. He said the role of who does what and the accountability of financial advisers to those regulators needs to be much clearer.

“What is the appropriate role of government organisations like MBIE as opposed to the role of a regulator, the FMA, and the role of the Commerce Commission?

"My view is that the MBIE should very much be a policy shop and shouldn’t be providing advice.

“If you look at the CCCFA [Credit Contracts and Consumer Finance Act], MBIE wrote the regulations that took the lending code (this is the code which requires you to account for your Netflix and your coffees) from 64 pages to 105. Even though every party supported the bill, that regulation was approved by the minister, not shown back to the [finance and expenditure] committee and turned into a shocker.

“We need to go back and look at the architecture because I want to be very clear to anyone in the industry, where you’re in insurance or financial services, you should know who you’re accountable to, what the rules are and be much clearer about the lanes of who has responsibility. “

Bayly gave the FMA credit for transitioning people to the new regime saying New Zealand was ahead of Australia on that score but he has been talking to the financial markets watchdog about its definition around wholesale investors telling summit attendees that he hasn’t been persuaded about the case for it.

Anti money laundering is another major issue affecting the industry.

“I know the government’s been working on it but I’m not persuaded we’re making enough progress.I would put a team on AML and it would be one of my highest priorities because it not only affects your industry but also real estate agents. How we address it and how long it takes is critical. The answer probably lies in blockchain but that will be something I will talk about more in time.” He added that while there is a need to create a better digital economy, the needs of the elderly and people with disabilities should be taken into account and that he has supported a petition in his name to continue access to cheques.

Getting Kiwis saving for the future is another challenge Bayly raised. When asked if compulsory KiwiSaver was on his agenda, he said he wasn’t going to be announcing any policy at that time but we need to make sure New Zealanders are investing in KiwiSaver.

“Personally I think we should be outlining and doing a progressive increase in KiwiSaver over time. Ideally it should be compulsory but at the least we should be getting the contributions up.” He said he thinks there needs to be a more holistic approach to financial literacy starting in schools but also encompassing a duty from employers to train staff.

On making the economy more productive, Bayly said New Zealand needs more dynamic capital markets. “I’ve been talking to the Stock Exchange, I’m very keen to implement capital market reforms. In the middle tier where New Zealand companies are seeking expansion capital, I’m going to remove any shackles perceived or otherwise, to allow KiwiSaver and fund managers to invest in great New Zealand businesses. Depth in the capital markets is really important, and we’ve got venture capital and merger level and I’ve got some ideas around that.”

Tags: Financial advice

« NZCFS study upswing as deadline loomedTough times ahead for NZ economy: Nikko economist »

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