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Member's bill aimed at protecting investors drafted

Contributor:
Fuseworks Media
Fuseworks Media
Lianne Dalziel
Lianne Dalziel

Wellington, March 19 NZPA - Labour MP Lianne Dalziel has drafted a bill to ensure investors benefit from action taken by regulators against investment companies.

However, ANZ Bank says the bill - if passed - would mean settlements were never finalised.

The Illegal Contracts (Unlawful Limitation on Regulator's Powers) Amendment Bill aimed at ensuring investors did not miss out on benefits that could come out of a regulator taking action against an investment company that had broken the rules, Ms Dalziel said.

"This issue was brought to my attention through the ING/ANZ settlement, where investors with money caught up in the ING Diversified Yield Fund (DYF) and the ING Regular Income Fund (RIF) were forced to sign away their rights to gain any benefit from someone else taking action against ING - including the regulator," she said.

"I have no problem with any company making a settlement conditional on not proceeding with a civil cause of action - that occurs every day. But this case was being investigated by the Commerce Commission at the time and the commission was included in the release. For me, that was a step too far."

The Commerce Commission investigation is continuing.

"In principle we cannot allow any regulator's authority to be undermined in this way, which is why I have chosen to amend the Illegal Contracts Act with this bill.

"Over half a billion dollars were stranded in the ING product funds, with a lot of it representing the life savings of elderly people who continue to be angry and confused at the way they were treated."

Members' bills -- generally opposition MP bills -- are considered fortnightly on a Wednesday when Parliament is sitting. Bills are drawn from a ballot so some can languish for years and once they are drawn seldom get further than a first reading unless the MP can muster numbers to be sent to select committees for public submissions.

The bill would be submitted for the next ballot.

It is likely to at least have the backing of ACT's John Boscawen who wrote last year, when Ms Dalziel originally said she would draft the bill, that he agreed with her.

Mr Boscawen said the 14,000 investors who lost money through the funds should benefit should ING/ANZ be found culpable.

A spokesman for Commerce Minister Simon Powers said he has asked for a copy of the bill and would seek advice from officials before stating a position.

ANZ New Zealand managing director private banking and wealth John Body said the bill's retrospective nature was worrying.

"It will create uncertainty for business if regulatory and legal requirements could be subject to change at a later date. At the same time parties involved in a dispute could potentially wait three to five years before they reach finality or closure while waiting for a regulator to undertake its investigations and ultimately give a final ruling."

The bill would undermine New Zealand's reputation for transparency and ease of doing business, he said.

"Under the bill there would be no incentive for parties to agree to out-of-court settlements, because agreements to settle disputes would never be full and final and would always be open to question or challenge."

More claims would be decided by regulators and courts which was a costly and slow way to go.

On the DYF and RIF, issue Mr Body said ANZ and ING had made $500m available to investors; 98 percent of investors were paid out at 60 cents per unit and 85 percent of those investors decided to reinvest returns in a high earning 8.3 percent per annum term deposit for five years.

ANZ investors also had the opportunity to request further compensation and could go to the Banking Ombudsman.

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