The Companies Office, Securities Commission, and the NZX Disciplinary Tribunal could be merged into a new market conduct regulator because the existing agencies failed to protect investors from finance companies collapses, Commerce Minister Simon Power sa
The Companies Office, Securities Commission, and the NZX Disciplinary Tribunal could be merged into a new market conduct regulator because the existing agencies failed to protect investors from finance companies collapses, Commerce Minister Simon Power said today.
Mr Power today released the Government's action plan for responding to the Capital Market Development Taskforce report.
In December, the taskforce made 60 recommendations on ways to increase the attractiveness of capital markets to both companies and investors.
"It is important that those companies looking to raise capital and to gain equity from the wider markets have a decent regulation regime, which gives them freedom to do that, but we need to balance that with mum and dads sitting in Tauranga with $5000, $10,000 or $50,000 to make a decision about where to invest those funds and making capital markets more accessible," Mr Power said
"After the last financial crash with respect to finance companies a number of regulatory bodies (were) standing there looking at each other as investors' money fell to the ground."
Further work would be done looking at folding the powers and enforcement capability into one super regulator.
"The taskforce identified flaws in our markets and where there are opportunities for improvement, and we need to act quickly to fix them," Mr Power said.
"We need to rebuild mum and dad investor trust in capital markets which has been severely dented by the global recession and finance company collapses.
"We want everyday investors to feel more confident about putting their savings into capital markets, through understanding the basics of investment, getting advice they can trust, and making informed choices."
Mr Power said some of the recommendations the Government was committed to implementing were:
* introducing plain English into investment statements and prospectuses, with warnings on risky or complex products;
* a more co-ordinated approach to the Government's role in improving the financial literacy of New Zealanders;
* ensuring the duties of fund managers and supervisors are clear and enforced;
* making it easier and cheaper for companies to raise capital privately by clarifying and broadening the exemptions to the Securities Act and Takeovers Act.
* improving risk management in the economy by supporting the development of derivatives markets in commodities and energy.
As well as steps to improve capital markets, the Government has started work on a business case to develop the taskforce recommendation of establishing an Asia-Pacific financial services hub.
Further details are expected to be announced in May.
Mr Power said officials were working with outside experts on the hub idea and they would be reporting to Economic Development Minister Gerry Brownlee.
Mr Power also repeated Prime Minister John Key's statement that there would be no sale of state owned enterprises, partial or otherwise, as recommended by the taskforce.
"If that policy was to change the prime minister would ensure it was campaigned on and a mandate sought," he said.
Improving the public's financial literacy was also important and currently responsibility for this was spread between ministers and organisations, this job would now be done by Mr Power.
