AARON GILMORE (National) : It is a pleasure to rise and talk about Part 2 of the Securities Disclosure and Financial Advisers Amendment Bill.
Hon Clayton Cosgrove: What a genius!
AARON GILMORE: The member for Waimakariri called me a genius, and I think that is quite interesting because I taught that member when he did his MBA classes a number of years ago, and he was not very clued-up at that stage.
Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. I just want to advise you that I slept through the lectures he gave.
The CHAIRPERSON (Lindsay Tisch): I am sure that is pertinent to the debate!
AARON GILMORE: Thank you, Mr Chair. That was a wonderful contribution by the member! We are talking about Part 2, and I want to talk about some of the issues that were touched on by my colleague Mr Bennett. He touched on a couple of really important aspects, particularly the issue of engagement versus employment. If members have worked with any sort of financial adviser, they will know that advisers have letters of engagement, not letters of employment, for their activities. That is actually quite an important, subtle, and technical change. I think that even lawyers or accountants generally do not believe they are giving letters of employment; they give letters of engagement. So this is an interesting bit of clarification in the bill. I think it is an important change and a good change. It is a wonderful step to take if it means that we again move a little bit of the red tape that exists in the system and give a bit more clarity.
The next issue I want to talk about is a related point that exists around the issue of liability and the exemption of liability for some financial advisers. We are making it quite clear what this bill applies to in terms of whether a person is a financial adviser, and we are making it quite clear as to when a liability may or may not arise. It is one matter to say it does not apply; it is another matter to say that a liability may or may not arise. New section 75, inserted by clause 16E, clarifies that quite significantly and makes it quite clear when a financial adviser is exempt from liability.
Mr Bennett touched on some of the subtle tidy-up issues that exist in this bill, such as little typos and issues about what area is covered. I notice that some changes have been tabled. One, in clause 19, is the omission of the words “by a person in New Zealand,”, which is an interesting aspect as the current Act currently states “by a person in New Zealand,”. The other aspect is around the dispute resolution service. That is quite important, because some of the issues that arise around dispute resolution for financial advisers can be quite complicated. Letters of engagement rather than letters of employment can be quite unclear and uncertain and quite short, and there can be some issues between the client and the provider of the service.
Clause 19A provides some clarity by inserting new section 161A, and I think that is another positive step to reduce some of the red tape and some of the confusion that exists in the capital markets. As somebody who has operated in the capital markets—and I enjoyed the hilarity from the other side of the Chamber when my experience in the capital markets was pointed out—I was pleased to work under the gentleman who was the chairman of the Capital Markets Development Taskforce, Rob Cameron. He was my boss for a number of years, and he was a good boss to work under.
Charles Chauvel: Were you employed or engaged?
AARON GILMORE: Some of these changes that were put forward are wonderful things—I will ignore that comment from that gentleman. One of the issues we have here is that if these changes in Part 2 bring in more clarity and get rid of a bit of red tape, and allow some of our capital markets to be able to get into a position where they can raise funds faster, more cheaply, and more efficiently, it gives more capital to other firms and gives them the ability to get into the markets faster and to help create jobs. That is what we are worried about in this day and age in some shape or form.
There is a myriad of other minor amendments in this bill, and we could touch on them. But I think that one of the big issues goes back to such things as a clarification between engagement and employment; when a liability does and does not apply; and clarifying whether someone is a financial adviser. One of the issues is about clarifying when dispute resolution may or may not apply. I think they are all very good and positive changes, and I think the bill is one we on this side of the Chamber definitely applaud. We believe it is a step, however small it may be, towards improving some of the issues in the capital markets. Thank you.