New bill to restore investor confidence

The Financial Markets Conduct Bill, currently at select committee, is critical to the continued rebuilding of investor confidence in New Zealand, says Commerce Minister Craig Foss.

Mr Foss accepted all but two of the commerce committee’s 13 recommendations after an inquiry into why finance companies failed since May 2006.

According to the commerce committee, since then 45 finance companies have failed, either being placed into receivership or entering into moratorium arrangements with debt holders.

It is estimated between 150,000 and 200,000 deposit holders were affected, with likely losses of more than $3 billion between May 2006 and December 2011.

These failures put at risk about $6 billion of investors' deposits, much of which will not be recovered. The stream of failed companies has also dented investor confidence in the country's capital markets.

Some of the recommendations made to the minister in the report included:

# Educating the public to understand financial markets better.

# Investigating the possibility of banning conflicted remuneration structures for financial advisors.

# Standardising the way information is presented so the public can readily understand financial information such as profitability.

# Introducing legislation to allow class actions.

# Ensuring resources are available to regulators to ensure that enforcement is timely and effective.

# Accelerating work on means of penetrating trusts to recover assets for creditors.

Mr Foss says that while the government supports the “general nature” of the recommendations, significant work has been carried out in reforming financial markets over the past three years.

“Most notably, since creating the new Financial Markets Authority, many of the issues identified by the commerce committee have either already been addressed or are being examined right now,” he told Parliament.

“All but two of the commerce committee’s 13 recommendations have been taken on board,” says Mr Foss.

He says the government is already progressing work in line with the recommendations around the Financial Markets Conduct Bill, addressing issues of disclosure, trustees, financial advisor and director duties.

He said further policy work is being undertaken to progress legislation on class actions and the law commission is examining issues around the operation of trusts.

The third and biggest problem was described by the committee as “deficiencies in disclosure advice and investors’ understanding”.

The report outlines instances where a number of investors lack of understanding was exploited by finance companies.

The committee’s main recommendation is for “serious efforts” to be made to improve ordinary New Zealanders' understanding of financial issues.

Mr Foss said financial literacy initiatives are being evaluated and improved and are hoped to address this lack of understanding.

Link to:

http://www.nbr.co.nz/article/duped-investors-get-nothing-finance-failure...

This article is tagged with the following keywords. Find out more about My Tags

Post Comment

13 Comments & Questions

Commenter icon key: Subscriber Verified

So - which MPs from whch political parties are going to support an inquiry by the Commerce Select Committee into prosecutions regarding Huljich Kiwisaver Scheme registered prospectuses dated 22 August 2008 and 18 September 2009?

Both Huljich Kiwisaver Scheme registered prospectuses dated 22 August 2008 and 18 September 2009 signed by the (now) Leader of the ACT Party and (now) Minister for Regulatory Reform, John Banks, MP for Epsom?

The above-mentioned registered prospectuses which contained untrue statements, but were signed by former fellow Directors of Huljich Wealth Management (NZ) Ltd. John Banks and Don Brash - who yet have their ACT Party policy of 'ONE LAW FOR ALL' apply to themselves?

Spot the difference?

http://www.scoop.co.nz/stories/BU1203/S01065/lombard-four-avoid-prison-r...

"At the time of the verdict, Judge Dobson said the directors’ offences were a “material step away from the seriousness required for a custodial sentence” and that the law created “criminal liability for what may be no more than a material misjudgement about the accuracy and adequacy of the description of the state of financial health of the company, as directors authorise it in offer documents.”

The 'Lombard Four' - were charged, convicted and sentenced.

John Banks and Don Brash have never been charged.

Why is that?

An arguably corrupt form of political protection - because this sordid, dodgy Government - 'perceived' to be the least corrupt country in the world' is dependent for the balance of power on the vote of a (in my considered opinion) yet to charged/convicted 'white collar' criminal - Minister for Regulatory Reform - John Banks?

Penny Bright
'Anti-corruption campaigner'

Reply
Share

They were investigated by the Securities Commission which decided they had nothing to answer for. Get a life and real job.

Reply
Share

Here's Lindsay no job himself still defending his National party /Act mates.

Funny how recentl all National party cronies defend even the indefensible in respect to heir friends

How Anal

Reply
Share

So - why didn't the 'new broom' Finance Markets Authority (FMA) independently review the 'Huljich Two' (John Banks and Don
Brash) - rather than rely on a decision of the previous (useless) Securities Commission?

If I'm upsetting you Lindsay - I must be doing a real good job!

(Albeit unpaid..... ).

So Lindsay - YOU don't support the principle (and ACT policy) of 'ONE LAW FOR ALL'?

Why is that?

Kind regards,

Penny Bright

'Anti-corruption campaigner'

Reply
Share

The judge's sentencing of the Lombard Gang of Four, shows that any reform of the financial sector is just window-dressing.

No point 'dressing to the nines', when you reek of B.O.

Reply
Share

This bill will achieve very little.

The way to improve confidence and participation is to improve performance - and unfortunately in NZ at the moment we have a sentiment of adding on costs via regulators to companies that are negatively affecting profits and returns.

Only answer Mr Foss is a well overdue "deregulation" and the public taking some personal accountability for making dumb decisions.

Reply
Share

Deregulation and lack of regulation has driven the western world into its current financial mess.

Reply
Share

Another "TUI" ad.?

Reply
Share

Lombard case

Next off the hook will be Hanover followed by the Strategic Finance directors

What a lame Government

No wonder Simon Power left parliament

Reply
Share

Time for Bill English to take over as PM and make some of the hard dcisions required at the moment

Reply
Share

English making hard decisions .... yeah right.

Reply
Share

investment jitters. No. I just won't invest. Especially when the old boys get wet bus ticket sentences.

Reply
Share

The one think that would go along way towards restoring investor confidence is make political donations illegal. Those found to affend have the choice of a 5 year jail term (not home detention or community service) or forfeit their wealth and/or the company involved to the state.

This would clean up the corruption in this world within five minutes of passing the law!!

Reply
Share

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7846 0.0018 0.23%
AUD 0.8921 -0.0020 -0.22%
EUR 0.6197 0.0009 0.15%
GBP 0.4878 -0.0005 -0.10%
HKD 6.0866 0.0146 0.24%
JPY 84.8070 0.1600 0.19%

Commods

Commodity Price Change Time
Gold Index 1228.6 -9.570 2014-10-23T00:
Oil Brent 86.8 0.380 2014-10-23T00:
Oil Nymex 82.0 1.530 2014-10-23T00:
Silver Index 17.1 -0.073 2014-10-23T00:

Indices

Symbol Open High Last %
NZX 50 5292.8 5344.4 5292.8 0.77%
NASDAQ 4459.5 4486.3 4452.8 0.69%
DAX 9008.6 9044.9 9047.3 -0.66%
DJI 16677.0 16811.7 16677.9 0.76%
FTSE 6419.1 6419.1 6419.1 -0.47%
HKSE 23311.9 23352.6 23333.2 -0.13%
NI225 15354.4 15377.0 15139.0 1.01%