REGULATORY IMPACT STATEMENT - May 2005 Immigration Advisers Licensing Bill

Background

In the development of the Immigration Advisers Licensing Bill, two Regulatory Impact Statement - Business Cost Compliance Statements (RIS-BCCS) were developed.  The first RIS-BCCS was developed and submitted to Cabinet in May 2004 and considered the regulatory and non-regulatory options to enhance the ability of immigration applicants to make a well-informed choice of immigration adviser.  Cabinet agreed to licensing of immigration advisers.  The second RIS-BCCS was developed and submitted to Cabinet in December 2004 and considered the licensing options for immigration advisers and a more detailed BCCS.

This document provides a final overview RIS-BCCS and reflects all Cabinet decisions on regulating immigration advisers.  The original two RIS-BCCS are available on the Department of Labour website (www.dol.govt.nz).

Statement of the nature and magnitude of the problem and the need for government action

The provision of immigration advice is currently unregulated and there are few market incentives for advisers to provide good services.  Immigration advisers advise, assist or represent applicants or potential applicants regarding all types of immigration applications including residence, temporary entry, appeals, exemptions, and refugee status claims and appeals.  They also advise third parties such as sponsors, employers and education providers.  An immigration adviser was used in around 9,000 (37 percent) residence applications and around 66,000 (17 percent) temporary entry applications in 2003/04.  Around 40 percent of immigration 'transactions' where an immigration adviser was involved were from immigration advisers based offshore.  The level of advice provided to potential applicants who did not go on to make an immigration application or to third parties is unknown.

The immigration advice industry is diverse, with advice being provided by a range of occupational groupings, including immigration consultants, lawyers, education recruitment advisers and not-for-profit organisations, as well as personal contacts.  The provision of immigration advice is currently unregulated and there are few market incentives for advisers to provide good services.  There is limited self-regulation, with two main voluntary industry associations - the New Zealand Association of Migration and Investment (NZAMI) and the New Zealand Immigration Institute (NZII).  The number of active immigration advisers at any one time varies in response to immigration policy changes and other external factors.  It is estimated that the number of people providing 'New Zealand immigration advice both on and offshore is around 1,000, based on the Department of Labour (DoL) statistics and an October 2004 survey of immigration advisers who had interacted with the DoL from May 2003 to May 2004.  The October 2004 survey indicated that of the 409 active immigration advisers who responded, 20 percent belonged to NZAMI and 1 percent belonged to NZII.

No formal statistics are available on the number of complaints about immigration advisers, however, every year complaints are made to the Minister of Immigration, the DoL, and the industry associations about both onshore and offshore immigration advisers.  The reasons for complaints have included: lodging unfounded or abusive refugees status claims without the knowledge of the client, inaccurate advice about immigration policy leading to poor and costly decisions, theft of money and documents, failing to lodge applications and appeals, failing to pass on information from the DoL to the client, knowingly submitting false or fraudulent documents to the DoL, and failure to provide services for which the member has been paid.

The cumulative harm caused is significant in many cases and irreversible in others.  Some applicants have faced serious financial loss due to high fees, relocating to 'New Zealand (on the basis of poor advice), and lengthy periods of time without employment.  Others have suffered irreparable damage to careers, family dislocation, and significant personal hardship.  Where immigration applications (or refugee status claims) have been declined due to poor or incompetent advice, some people have had to leave 'New Zealand, be removed, or remain here illegally (and face removal in the future where possible).

Immigration applicants often use an adviser's services only once and often have insufficient information to make a well-informed choice of adviser.  Immigration applicants are unlikely (and sometimes unable) to make use of New Zealand's consumer protection measures once harm has occurred as they may be offshore, in New Zealand unlawfully and/or unaware of existing legal remedies.  Although Section 142(1)(j) of the Immigration Act 1987 makes it an offence to wilfully mislead, or act negligently or unprofessionally while assisting a person in a visa or permit application or appeal, this section has not been tested since its introduction in 1999 as its wording makes proof of an offence problematic.

Statement of the public policy objective

The policy objective is to ensure that regulating immigration advice will:

• enhance the ability of immigration applicants to make a well-informed choice of immigration adviser;
• reduce the risk of serious harm to those who use an immigration adviser by creating effective incentives for advisers to provide competent and ethical services; and
• provide clear and accessible complaint and redress procedures for those who use an immigration adviser.

The underlying principles behind these three objectives are consumer protection, and enhancing the reputation of New Zealand as a migration destination.

Statement of feasible options (regulatory and/or non-regulatory) that may constitute viable means for achieving the desired objective

Non-regulatory options

Status Quo (voluntary self-regulation)

People providing advice relating to New Zealand immigration policy are subject to normal business legal requirements and the offence provisions under the Immigration Act 1987, the Crimes Act 1961 and other legislation, and are also subject to consumer protection measures, such as the Fair Trading Act 1986, the Consumer Guarantees Act 1993 and the Disputes Tribunal.  Some immigration advisers are members of the NZAMI, the NZII or voluntary associations of education advisers, and are subject to their organisation's standards.  Lawyers providing immigration advice are subject to their professional body's disciplinary processes.  The status quo was rejected in favour of the preferred option because its retention would not achieve the public policy objectives.

Certification

A new Act would be developed to provide for a certification scheme for immigration advisers.  The Act would: reserve a title for the sole use of certified immigration advisers; empower an agency to certify that individuals had satisfied certain requirements before they could use the reserved title; and empower the agency to remove the reserved title if an immigration adviser fell below the acceptable standards.  Certification would not be compulsory.  Those who were not certified would be able to offer their services in competition with certified immigration advisers, but under a different title. 

Certification was discarded because it would not prevent the practices of those advisers of most concern.  Stakeholders did not support this option, as they considered it would allow some advisers to continue to provide incompetent and unethical services, and would not address the problem.

Preferred option: licensing

Under this option a new Act would be developed to provide for the licensing of immigration advisers.  The legislative framework would have the following key features:

• a title reserved for the sole use of licensed immigration advisers;
• definitions of what immigration advice is, and what it is not, and therefore who is an immigration adviser;
• a requirement for all individual immigration advisers, including not-for-profit and offshore advisers, to be licensed, with some exemptions from the licensing regime for certain individuals who may choose to opt-in (for example, MP's), and who may not opt in (for example, lawyers);
• offshore advisers based offshore are temporarily exempt from the licensing scheme (but may opt in), however, the exemption expires three years after enactment and at that time, offshore advisers will need to be licensed;
• statutory fitness standards that prohibit certain individuals from obtaining a licence;
• a complaints body within the regulating body, and the right of appeal and review made to the District Court;
• a regulating body to maintain a register of immigration advisers; develop and maintain competency standards and a code of conduct; facilitate the education and development of immigration advisers; enhance public awareness of the regulating body and its functions; and enforce the legislation;
• sanctions and penalties for unlicensed immigration advisers, including allowing the Department of Labour's Immigration Service to refuse to accept applications lodged by unlicensed immigration advisers; and both knowledge and strict liability offences;
• government contributes to the costs of establishment, regulating not-for-profit advisers, investigating and prosecuting unlicensed advisers, and the departmental costs; and
• a period of 12 months from enactment to allow all immigration advisers to become licensed.

Options for the regulating body

Industry regulating body

The regulating body would comprise representatives of the immigration advice industry.  As outlined above, it would have responsibility for investigating complaints and disciplining licensed advisers regarding breaches of the code of conduct.  Investigation and prosecution of unlicensed advisers would sit with government.  This option was not recommended on the basis that the immigration advice industry is too diverse and lacks the homogenous objectives required for an industry body to function as an effective regulatory body that could administer the statutory framework. 

Preferred option: Independent regulating body

The regulating body will be independent from industry, and be established within the Department of Labour.  It will maintain functional independence from the Immigration Service.  It will have responsibility for investigating complaints about and disciplining licensed advisers, as well as investigating and prosecuting unlicensed advisers.

Statement of the net benefit of the proposal, including the total regulatory costs (administrative, compliance and economic costs) and benefits (including non-quantifiable benefits) of the proposal, and other feasible options

Government

There are likely to be costs associated with the establishment of the licensing regime and annual on-going costs relating to the administration and enforcement of the licensing regime by the regulatory body and the department.

Under the proposal, the Crown has agreed in principle to bear:

• establishment costs (such as setting up operating systems, employing staff)  
• annual costs of regulating not-for-profit advisers, investigating and prosecuting unlicensed advisers and departmental costs.

The costs of licensing for-profit advisers will be met through fees charged to advisers.  The Crown may consider an additional supplement to reduce the annual licence fee charged to advisers when the fiscal implications of this initiative are considered by Cabinet.

Improved consumer protection for those using the services of an immigration adviser will enhance 'New Zealand's reputation as an attractive destination for both temporary and permanent migrants.  By progressively extending the regime offshore, 'New Zealand's international relations and reputation as a safe, reliable destination could also improve.  The attraction of skilled migrants, skilled temporary workers, international students and visitors to New Zealand is likely to contribute to growing an inclusive, innovative economy and improving 'New Zealand's skills base. 

Government is also likely to make efficiency gains in its immigration operations due to fewer poor quality immigration applications and appeals being lodged by immigration advisers.  Introducing clear new incentives for immigration advisers to provide acceptable standards of immigration advice, and disincentives to drop below these standards, may also result in reduced immigration fraud over time.  Reduced immigration fraud (regarding health status, job offers, and criminal records among other things) may lead to savings in the health, welfare and justice systems. 

Immigration applicants/consumers

The cost to migrants and potential migrants of using the services of a for-profit immigration adviser could increase, as it is likely that advisers will pass on the increased costs associated with obtaining a licence and complying with the code of conduct.  The cost of using a not-for-profit immigration adviser should not increase as their costs are to be met through Crown funding. However, minimum competence standards and a code of conduct will increase the likelihood that services are conducted in a competent and ethical manner, and thus reduce the risk of harm to consumers.  Some consumers may remain vulnerable in the short term, as licensing will be initially optional for offshore advisers for the first three years following enactment. 

A public register of licensed immigration advisers will improve an immigration applicant's ability to make a well-informed choice of immigration adviser.  Consumers will also have a clear and accessible avenue for complaint and redress if necessary.  The independence of the regulator from industry and its inclusion in the DoL will provide immigration applicants with confidence in the standards set and maintained for the industry, and in the administration of the complaints procedure.

Immigration advisers

The proposal is expected to result in increased costs to immigration advisers through licence application fees, and compliance costs associated with applying for and renewing licences, meeting minimum competence standards and complying with a code of conduct (details yet to be decided).  Application fees will be prescribed in regulations after the enactment of new legislation.  An annual licence fee is expected to be in the order of $1000 - $2000.  Not-for-profit immigration advisers will not have to bear the full costs of licensing, but may incur some compliance costs, which are likely to be similar in time to those set out in the BCCS below, but not in dollar value.  

In Australia and the 'United Kingdom, the costs of licensing have not adversely affected the immigration advice industry; rather the introduction of licensing regimes has been followed by an increase in the number of advisers.  Given the similarity of New Zealand's proposed licensing regime, it is expected that the effect will be the same in 'New Zealand. 

Some exemptions from the licensing regime are proposed.  Certain exempt people may obtain a licence voluntarily, but others will be excluded from the licensing regime. Offshore advisers will bear the costs of the proposals after three years when offshore licensing will become compulsory.  The proposals will also affect those who may not consider themselves to be immigration advisers but who nonetheless provide immigration advice in the course of their work (for example, recruitment advisers).  It is likely that some will choose to either discontinue providing immigration advice or some organisations may choose to nominate particular individuals to be licensed.

The costs are considered to be offset for immigration advisers by the benefits of licensing.  Requiring immigration advisers to meet minimum competence standards and comply with a code of conduct is likely to enhance the overall quality of advice provided by immigration advisers, both for-profit and not-for-profit.  Together with removing unethical and incompetent advisers from the industry, this will enhance the credibility and reputation of the industry as a whole.  The proposals will particularly benefit those advisers who already provide competent and ethical services and will obtain a practical and marketing advantage over those who do not. 

In the longer term, minimum competence standards will give rise to education and training opportunities for all licensed immigration advisers, which are likely to provide them with marketing advantages and to improve their relationships with the DoL.  The requirement for the regulator to develop the competency standards and code of conduct in consultation with stakeholders will help the licensing regime to be developed in a way that supports the industry.

'New Zealand society

'New Zealand society as a whole could benefit from savings to the immigration, health, welfare and justice systems due to reduced immigration fraud.  Reduced fraud relating to health and character requirements (such as declarations of diseases and criminal offences) could increase the general safety and security of New Zealanders.  Moreover, New Zealand as a whole benefits both economically and culturally when migrants, temporary workers, international students and visitors are attracted to and settle well in 'New Zealand.

Consultation undertaken

The Ministries of Consumer Affairs, Economic Development, Education, Foreign Affairs and Trade, Justice, Pacific Island Affairs, Social Development, and Tourism and the Department of Internal Affairs, the State Services Commission, the Treasury, New Zealand Trade and Enterprise, and the Offices of the Community and Voluntary Sector, Ethnic Affairs, and the Police Commissioner were consulted in the development of these proposals.  The Department of the Prime Minister and Cabinet was informed. [C1] ;

The Ministry of Justice's strong view that practising lawyers should be excluded from the licensing regime, rather than simply exempted, is reflected in the preferred option. [C2]   The Office of Ethnic Affairs concern about compliance costs on the not-for-profit sector is also been reflected in the preferred option.  The not-for-profit sector's inclusion in the proposed regulation will be supported by the proposed education and public awareness functions as the regulation is implemented. 

Stakeholders (including immigration advisers, community groups, lawyers, education agents, recruitment agents and regional development agencies) were sent the discussion document Regulation of the Immigration Advice Industry in September 2003, and feedback was gathered via focus group meetings held throughout the country in October 2003 with 12 written submissions received.  Participants supported the regulation of immigration advice via licensing by an independent regulator but expressed concern that the costs should not be prohibitive.  These concerns have been taken into account in the development of the detailed proposals.

Further dialogues were held with stakeholders in Auckland, Christchurch, Hamilton and Wellington in July 2004 to discuss the detail of the licensing framework.  Cabinet decisions and proposals were made publicly available on the immigration website.  Participants were also provided with the opportunity to provide written feedback and 11 submissions were received.  (The low number of submissions is likely due to stakeholder perception that their views were already adequately recorded, and anticipation of select committee consultation).   There was general support for the proposals.

The proposals have been discussed with the Office of the Immigration Services Commissioner in the United Kingdom.  The Australian Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) has also been consulted in light of New Zealand's obligations under the Trans-Tasman Mutual Recognition Arrangement (TTMRA).  DIMIA indicated support for the proposals and is confident that they will fit well with TTMRA requirements.  The new regulator will need to consult further with 'Australia's Migration Agents Registration Authority when developing competency standards and the code of conduct to ensure TTMRA obligations are met.

BUSINESS COMPLIANCE COST STATEMENT

Sources of compliance costs and estimates of those costs are as set out below.  Costs are estimated on an hourly rate of $112.

Compliance costs that will apply to immigration advisers directly as a result of the proposed primary legislation

Learning new requirements stemming from primary legislation

These costs (which include registration requirements such as form filling, and training of staff in the new system and its requirements) will affect all immigration advisers and are estimated at $56 (one-off cost based on 30 minutes taken). 

Spending time with an inspector as part of the licensing application process

This is a potential cost to license individuals, but most license applicants would not incur this cost because it is anticipated that application processing will be primarily paper-based and inspections discretionary.  The cost is estimated at $205 (one-off cost based on 110 minutes taken).

Establishing internal complaints procedures to comply with the 'tiered complaints system' and processing any complaints received

This is a potential cost to licensed individuals.  However, many are likely to have existing internal complaints procedures.  Establishment costs are estimated at $784 (one off cost based on 7 hours taken).  The cost of processing a complaint is estimated at $448 (based on 4 hours taken).

Spending time with an inspector as part of the complaints process

This is a potential cost to individuals that are unlicensed but may provide immigration advice.  This cost is estimated at $280 (one off cost based on 180 minutes taken).

Cooperating with the regulator in any investigation to establish whether, as an unlicensed adviser, they should be required to hold a licence.

This is a potential cost to individuals that are unlicensed but may provide immigration advice.  This cost is estimated at $280 (one-off cost based on 150 minutes taken).

Compliance costs resulting from secondary legislation to be developed by the regulator

Compliance costs for businesses will also arise from the licensing application process, competency standards, and code of conduct that are to be developed by the regulator.  These costs are unable to be quantified at this time because the operational processes, competence standards and code of conduct will only be developed once the legislation is enacted and the regulator is established.

Compliance costs will reduce over time as businesses become more familiar with the regulatory requirements and the application, complaints and appeals processes.

It is estimated that around 1000 advisers are likely to be affected by the proposals, based on DoL statistics and an October 2004 DoL survey of immigration advisers (this number excludes lawyers who act as immigration advisers).  Based on the October 2004 DoL survey of immigration advisers, the number of active for-profit immigration advisers can be determined by primary occupation and organisation size.   This for-profit grouping includes offshore advisers as the proposed legislation will require them to hold a licence three years after coming into force, but does not include groups that are exempt.  The analysis of the for-profit immigration advisers is as follows:

·         For 53 sole traders, 46 were based in 'New Zealand and 4 offshore.  The primary occupation was immigration consultant for 31 individuals (27 onshore, 4 offshore), education agent for 7 individuals (5 onshore, 2 offshore), administration for 4 onshore individuals, and recruitment agent for 2 onshore individuals.  The other occupational groups with 1 onshore individual were travel agent, accountant and education provider.  The "other" non-specified occupation included 5 onshore and 1 offshore individuals.

·         For 164 organisations with 2-19 employees, 115 were based in New Zealand and 49 offshore.  The primary occupation was immigration consultant for 92 (62 onshore, 30 offshore), education agent for 34 (26 onshore, 8 offshore), administration for 6 (4 onshore, 2 offshore), recruitment agent for 3 (2 onshore, 1 offshore), accountant for 10 (9 onshore, 1 offshore), education provider for 4 individuals (2 onshore, 2 offshore), travel agent for 3 individuals (1 onshore, 2 offshore).  The "other" non-specified occupation included 9 onshore and 3 offshore.

·         For 11 organisations with 20-49 employees, 2 were based in 'New Zealand and 9 offshore.  The primary occupation was immigration consultant for 6 (1 onshore, 5 offshore), accountant for 2 offshore, 1 onshore for administration and 1 each offshore for travel agent and education provider.

·         For 6 organisations with 50+ employees, 3 each were based onshore and offshore.  The primary occupation was 1 onshore for immigration consultant and 1 offshore for administration, and 2 onshore and 2 offshore were in the "other" non specified occupation.

Compliance costs will be minimised by widely publicising the regulatory requirements (and supporting processes) within the immigration advice industry, allowing a 12-month period for advisers to meet the requirements, and providing for consultation with stakeholders in the development of the competency standards and code of conduct.  It is anticipated that the regulator will have a website and will develop resources for advisers over time, including standard forms and contracts.  It is also anticipated that the regulator will reduce compliance costs for small businesses by describing procedures that would be deemed to meet the regulatory requirements.  In particular, acceptable procedures for establishing internal complaints procedures, and processing any complaints could be set out by the regulator.