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Financial Service Providers (Pre-Implementation Adjustments) Bill (Consistent) (Section 25(c)) [2009] NZBORARp 70 (19 November 2009)

Last Updated: 28 April 2020

Financial Service Providers (Pre-Implementation

Adjustments) Bill

19 NOVEMBER 2009

ATTORNEY-GENERAL LEGAL ADVICE

CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990:

FINANCIAL SERVICE PROVIDERS (PRE-IMPLEMENTATION ADJUSTMENTS) BILL

1. We have considered whether the Financial Service Providers (Pre-Implementation Adjustments) Bill (the ‘Bill’) (PCO 13992/3.1) is consistent with the New Zealand Bill of Rights Act 1990 (‘Bill of Rights Act’). We understand the Bill is likely to be considered by the Cabinet Legislation Committee at its meeting on Thursday, 26

November 2009.

2. The Financial Advisers Act and the Financial Service Providers (Registration and Dispute Resolution) Act were passed in September 2008. The Financial Service Providers (Registration and Dispute Resolution) Act introduced a registration and dispute resolution mechanism for all financial service providers, while the Financial Advisers Act established a regulatory regime for financial advisers. Both pieces of legislation have been partially brought into force to enable government and industry to begin the implementation of the regime. Additional provisions are to be brought into force in mid-2010 but the regime will not be fully operative until it is implemented at the end of 2010.

3. During the implementation of the Financial Advisers Act and the Financial Service Providers (Registration and Dispute Resolution) Act it was discovered that various refinements are required to ensure that the regime is effective in achieving its objectives. The Bill contains the amendments necessary to implement the regime.

4. The only Bill of Rights issue identified in the Bill involves clause 23 which repeals current section 115(3) of the Financial Advisers Act and substitutes a new provision on substantially the same terms. Current section 115 contains the offence of performing a financial adviser service without being authorised. Under the new section, an accused person must prove (on the balance of probabilities) that they are in fact, an authorised financial adviser. New section 115(3) is prima facie

inconsistent with the presumption of innocence under section 25(c) of the Bill of

Rights Act.

Section 25(c) – Right to be presumed innocent until proved guilty

5. Section 25(c) affirms the right to be presumed innocent until proved guilty. This means that an individual must not be convicted where reasonable doubt as to his or her guilt exists. The prosecution in criminal proceedings must therefore prove, beyond reasonable doubt, that the accused is guilty.

6. Reverse onus offences give rise to an issue of inconsistency with section 25(c)

because the accused is required to prove (on the balance of probabilities) a defence

to escape liability. In other criminal proceedings an accused must merely raise a defence in an effort to create reasonable doubt. Where an accused is unable to prove the defence, then he or she could be convicted even though reasonable doubt exists as to his or her guilt.

7. Similarly, a provision which requires an accused person to disprove (on the balance of probabilities) the existence of a presumed fact, that fact being an important element of the offence in question, would also be prima facie inconsistent with the presumption of innocence.

8. Our previous advice on the Financial Advisers Bill, given in 2007, considered the offence of performing financial adviser services for members of the public without being a registered member of an approved professional body. In that advice we stated that the objective of the provision was to ensure that persons who provide financial advisory services are qualified and competent to provide these services by ensuring they meet the minimum standards required for membership of an approved professional body.

9. Furthermore, we stated that the offence was regulatory in nature (as opposed to offences that are truly criminal) and the information that could exonerate the defendant is information that is peculiarly in the realm of the defendant.

10. We consider that the justifications set out above in relation to the Financial Advisers Bill remain the same for the prima facie inconsistency caused by new section 115(3) in the Bill.

11. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act. This advice has been prepared by the Public Law Group and the Office of Legal Counsel.

Jeff Orr

Chief Legal Counsel

Office of Legal Counsel

In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Financial Service Providers (Pre-Implementation Adjustments) Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney- General agrees with all aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter.