New Zealand’s Securities Commission needs to be given more powers as part of an overhaul of New Zealand’s regulatory system, a review of the commission has found.

The review, which assessed the commission’s overall effectiveness in achieving its regulatory objectives, was carried out by Michael Prada, former chair of France’s Securities Commission and Neil Walter, a former Secretary of Foreign Affairs and Trade.

And its finding was that “within the limitations of its powers and resources, the Securities Commission discharges its responsibilities efficiently and to a high professional standard”.

It praised the “strong leadership” of chair Jane Diplock, who is supported by a “high-calibre” commission and a “small but well-performed” team of staff.

But it pointed to concerns about the commission’s ability to cope with an influx of new laws such as the Financial Advisers Act and anti-money laundering legislation.

The main constraints on the commission’s effectiveness lie outside its control, the review concluded; in other words, don’t hate the player, hate the game.

It said that the problems stem from weaknesses in current legislation, the commission’s narrow mandate and lack of powers, the proliferation of regulatory bodies, inadequate resourcing and bottlenecks in the judicial process.

“The Securities Commission currently lacks the teeth to give full effect to the legislation and regulations,” the report said.

It recommended the commission be given more extensive powers, including the power to issue rulings, stronger investigative power and the ability to monitor the conduct of intermediaries such as trustees, asset managers and auditors.

Establishing an office in Auckland and investing in IT systems would also help the commission’s performance, it said.

Other suggestions included that the commission take a more proactive approach to determining whether particular offers are within its responsibility and be prepared to “test the boundaries of legislation” in cases of doubt.

Another contentious suggestion was that the commission be given the power of pre-vetting offer documents to assess whether risks are appropriately disclosed.

“We note that this power would need to be exercised carefully and that any findings would need to be communicated in such a way as to avoid moral hazard,” the report added.

A comparison with counterpart agencies overseas showed that New Zealand’s Securities Commission delivers good value for money, the report said.

For instance, while New Zealand’s Securities Commission gets by on just a $9 million operating budget and 40 staff, the Australian version gets $342 million and has more than 1600 staff.