Recommendations
45. It is recommended that the Committee:
1. Note that a Financial Products, Providers and Intermediaries Bill is included in the 2007 Legislation programme in Category 4 (to proceed to select committee in 2007);
2. Note that a period of up to two years would be required to complete the policy and drafting work necessary to introduce this bill for all of the proposals arising from the reviews of Financial Intermediaries, Financial Products and Providers and Domestic Institutional Arrangements;
3. Agree, subject to the report back in recommendation 5 below on the detailed costings of the following proposals and the implications for Vote:Commerce, to a two-stage approach to legislation beginning with the introduction of legislation most urgently needed to implement decisions necessary to achieve compliance with international obligations and to better protect consumers through:
3.1 Registration of all financial service providers;
3.2 Improved supervision of corporate trustees;
3.3 Improved prudential supervision of non-bank deposit takers, to be overseen by a single prudential regulator that would also be responsible for the prudential regulation of insurers;
3.4 Regulation of financial intermediaries;
3.5 Providing for a comprehensive approach to consumer dispute resolution and redress;
4. Note that policy recommendations necessary to draft legislation in respect of the proposals in 3.1, 3.2, 3.3, 3.4 and 3.5 are contained in the accompanying papers entitled:
4.1 Registration of Financial Service Providers;
4.2 Trustee Supervisory Model;
4.3 Institutional Arrangements for Prudential Regulation;
4.4 Regulation of Non-Bank Deposit Takers;
4.5 Financial Advisers – A New regulatory Framework;
4.6 Consumer Dispute Resolution and Redress;
5. Direct officials from the Ministry of Economic Development, in consultation with the Securities Commission and Treasury, to report back to Cabinet by 30 November 2007 on the detailed costings and funding options for Vote:Commerce output expenses arising from the additional functions associated with the registration of all financial service providers; the regulation of financial advisers; the strengthened supervision of corporate trustees; and provision for industry provided dispute resolution schemes including options for industry or self funding;
6. Note that officials from the Reserve Bank in consultation with the Treasury will report separately to Cabinet in July 2007 on details related to the regulation of non-bank deposit takers, including funding requirements;
7. Direct officials from the Ministry of Economic Development (lead), the Treasury, the Reserve Bank of New Zealand and the Securities Commission to report back to EDC by 30 November 2007 with proposals to provide for:
7.1 A single regulatory regime for collective investment schemes including the implications for all superannuation schemes of Ministerial decisions to separately progress regulation of KiwiSaver compliant schemes;
7.2 Improved trustee supervision of debt issuers;
7.3 An improved approach to disclosure for securities offerings;
7.4 Necessary amendments to the law relating to insurer contracts and disclosure;
7.5 A comprehensive and simplified approach to regulating Mutuals' governance;
7.6 The regulation of platforms and portfolio management services that perform investment discretions on behalf of investors;
8. Direct officials from the Reserve Bank of New Zealand (lead), the Treasury, the Ministry of Economic Development and the Securities Commission to report back to Cabinet by 30 November 2007 with proposals to provide for a comprehensive prudential regulatory regime for insurers;
9. Invite the Minister of Commerce to announce the government's decisions on the reviews of Financial Intermediaries and Financial Products and Providers including details of:
9.1 The two step approach to legislation;
9.2 The specific policy decisions made on proposals in the accompanying papers;
9.3 The further work directed of officials in Recommendations 7 & 8 above;
10. Agree, as part of the above announcement, to publicly release this paper and the related papers on:
10.1 Registration of Financial Service Providers;
10.2 Trustee Supervisory Model;
10.3 Institutional Arrangements for Prudential Regulation;
10.4 Regulation of Non-Bank Deposit Takers;
10.5 Financial Advisers – A New regulatory Framework;
10.6 Consumer Dispute Resolution and Redress;
11. Note that in December 2005, Cabinet agreed in principle, that the scope of the trans-Tasman Council for Banking Supervision be expanded to cover co-ordination on trans-Tasman issues in prudential supervision in the financial sector more broadly, subject to further work; and directed the interdepartmental working group, chaired by Treasury, to report back to Cabinet by 30 November 2006 on details of how the trans-Tasman Council for Banking Supervision can be expanded to include co-ordination on prudential supervision more generally, taking into account the directions of the Review of Financial Products and Providers and discussions with Australian officials [CBC Min (05) 18/29 refers]; and
12. Agree to extend the report back to Cabinet on how trans-Tasman Council for Banking Supervision be expanded to include coordination on prudential supervision to 30 November 2007.
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