Review of Financial Providers and Products Discussion Documents Released - Minister of Commerce Media Statement

Commerce Minister Lianne Dalziel today released a series of nine discussion papers as part of the review of financial products and providers. The papers propose a framework of regulation for the non-bank financial sector.

The review is the fourth and final part of the government's reform programme for the non-bank financial sector and follows the introduction of the Takeovers Code, the work on regulation of securities exchanges and regulatory institutions and the changes in the Securities Legislation Bill.

Lianne Dalziel said the aim of the review was to develop an effective and consistent framework for the regulation of non-bank financial institutions and financial products to promote confidence and participation in financial markets by investors and institutions, and ensure a sound and efficient financial sector.

"The review is being undertaken because there is a host of legislation in the non-bank financial sector that has been developed in different decades and centuries, creating confusing or conflicting objectives, gaps in the regulatory regime and inconsistencies of regulatory treatment for similar products. The current regulatory regime in many cases has led to unnecessary compliance costs and inefficient regulation that is impeding business operation and innovation. In some areas consumer protection is not as effective as it should be," Lianne Dalziel said.

"We are taking the opportunity to update the legislation, reduce compliance requirements for business, make regulation more effective and improve consumer protection."

Most of the options for reform contained in the discussion documents were developed in conjunction with advisory groups made up of industry participants. While the advisory group process has provided invaluable business insight, Lianne Dalziel said it was important that the wider market have the opportunity to contribute to the review.

Lianne Dalziel said that the review is taking the same approach as the review of regulatory frameworks: that is, ensuring that quality regulatory frameworks support New Zealand's international reputation as a quality investment and business destination. The aim is to ensure that New Zealand's regulatory environment is effective in meeting its objectives and does so at least cost to the economy.

"By applying quality regulation principles, the resulting regulatory framework will meet its objectives without imposing unnecessary costs, and that is why the feedback from submitters is so vital to the process" Lianne Dalziel said.

The discussion document on financial intermediaries, which is also a part of the RFPP, has already been released and the deadline for submissions has been extended by one month to 1 October 2006.

The remaining discussion documents cover:

• Registration of Financial Institutions;
• Insurance;
• Supervision of Issuers;
• Consumer Dispute Resolution and Redress;
• Non-Bank Deposit-Takers;
• Collective Investment Schemes;
• Mutuals' Governance;
• Securities Offerings;
• Platforms and Portfolio Management Services

Submissions on these documents close on 1 December 2006 and final policy decisions will be presented to Cabinet in the first half of next year.

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