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Financial Markets (Conduct of Institutions) Amendment Bill (Consistent) (Sections 14, 21) [2019] NZBORARp 64 (27 November 2019)
Last Updated: 27 May 2020
27 November 2019
LEGAL ADVICE
LPA 01 01 24
Hon David Parker, Attorney-General
Consistency with the New Zealand Bill of Rights Act 1990: Financial Markets
(Conduct of Institutions) Amendment Bill
Purpose
- We
have considered whether the Financial Markets (Conduct of Institutions)
Amendment Bill (“the Bill”) is consistent with
the rights and
freedoms affirmed in the New Zealand Bill of Rights Act 1990 (‘the Bill of
Rights Act’).
- We
have not yet received a final version of the Bill. This advice has been prepared
in relation to the latest version of the Bill
(PCO 22342/9.0). We will provide
you with further advice if the final version includes amendments that affect the
conclusions in
this advice.
- We
have concluded that the Bill appears to be consistent with the rights and
freedoms affirmed in the Bill of Rights Act. In reaching
that conclusion, we
have considered the consistency of the Bill with s 14 (freedom of expression).
Our analysis is set out below.
The Bill
- The
Bill amends the Financial Markets Conduct Act 2013 (“the principal
Act”) amongst other enactments to ensure that certain
financial
institutions and their intermediaries comply with a principle of fair conduct,
and associated duties and regulations.
- The
Bill enacts a new regulatory regime for the general conduct of financial
institutions and their intermediaries. Specifically the
regime:
- establishes
a new fair conduct principle that requires financial institutions to treat
consumers fairly, including by paying due regard
to their interests; and
- requires
a financial institution to establish, implement, and maintain an effective fair
conduct programme and to comply with it.
- The
purpose of the Bill is to improve the conduct of particular financial
institutions in respect of services and products provided
to consumers, thereby
reducing the risk of harm to those consumers. The regime is the result of a
review that identified certain
institutions, particularly banks and life
insurers, have a lack of focus on good outcomes for customers, and ineffective
systems
and controls to identify, manage and remedy conduct
issues.
Consistency of the Bill with the Bill of Rights Act
Section 14 – Freedom of Expression
- Section
14 of the Bill of Rights Act affirms that everyone has the right to freedom of
expression including the freedom to seek, receive,
and impart information and
opinions
of any kind in any form. The right has been interpreted as
including the right not to be compelled to say certain things or to provide
certain information.1
- Clause
9 of the Bill inserts new subpart 6A of Part 6 into the principal Act.
Specifically, proposed new s 446H which implements a
new duty on financial
institutions to make publicly available a copy of its fair conduct programme and
any material changes to it.
The new proposed section also requires financial
institutions to notify the Financial Markets Authority when the programme is
made
publicly available, and of any material changes to the programme. These
requirements prima facie limit the right to freedom of expression of
financial institutions.
- Where
a provision is found to limit a particular right or freedom, it may nevertheless
be consistent with the Bill of Rights Act if
it can be considered a reasonable
limit that is justifiable under s 5 of that Act. The s 5 inquiry may be
approached as follows:2
- does
the provision serve an objective sufficiently important to justify some
limitation of the right or freedom?;
- is
the limit rationally connected with the objective?;
- does
the limit impair the right or freedom no more than is reasonably necessary for
sufficient achievement of the objective?; and
- is
the limit in due proportion to the importance of the objective?
- The
objective of proposed new s 446H is to hold financial institutions to their fair
conduct programmes in order to protect consumer
interests. The proposal is
rationally connected to the objective of ensuring financial institutions treat
consumers fairly.
- The
proposal is necessary and proportionate as financial institutions will be
required under the Bill to establish and maintain a
fair conduct programme and
to inform consumers and make public such programmes. The availability of the
information will assist in
keeping financial institutions publicly accountable
to consumers and the industry regulator in order for the policy to be effective
in its implementation and to ensure consumers know what they can expect from the
conduct of financial institutions.
- For
these reasons, we conclude that any limits to the freedom of expression imposed
by the Bill are justified under s 5 of the Bill
of Rights
Act.
Conclusion
- We
have concluded that the Bill appears to be consistent with the rights and
freedoms affirmed in the Bill of Rights Act.
Edrick Child
Deputy Chief Legal Counsel Office of Legal Counsel
1 See, for example,
Slaight Communications v Davidson 59 DLR (4th)
416; Wooley v Maynard [1977] USSC 59; 430 US 705 (1977).
2 Hansen v R [2007] NZSC 7 at [123]
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