Memo to Dalziel: Give investors protection

Friday, November 2nd 2007, 5:59AM 2 Comments

One of the things I was looking out for in the Cabinet reshuffle this week was what happened to the Minister of Commerce. Lianne Dalziel has been running this portfolio, which has in its brief regulation and control of the financial sector, including advisers and finance companies. There was a thought that she may have been replaced in this role, however that didn’t happen. Dalziel has done a pretty good job in understanding issues and being prepared to listen to arguments when change is being considered. However, there is a view, starting to be expressed more loudly in some quarters, that she has been far to slow to act in tidying up the finance company (or non-bank deposit taking) sector, and indeed the area of financial advice. One of the issues which is starting to get traction is that New Zealand law offers very little in the way of investor protection. This may start to become a bigger issue as next year’s general election moves closer and people realise how much money they have lost. While she is still in this role, Dalziel maybe well-advised to speed up changes in this area as it could well become a soft spot for the government. A few elections back NZ First Winston Peters spent some time on this issue, but failed to get much traction. This time around, with the events which have taken place, a political party could well hone in on this area. More importantly though, if the sector is to grow and people are encouraged to save and take advice, then they deserve some half-decent protection.

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Comments from our readers

On 3 November 2007 at 10:51 pm Geoff Birss said:

Hi Phil

If I was asked to grade or mark your article I would have to give it a 10 out of 10.

Your suggestion that the recent collapse of NZ finance companies may become an election issue is very close to the mark. When some people were asked why they voted NZ First back in the 1990's - Wine Box was often mentioned.

It is difficult to be sure what Dalziel will achieve to promote the sorely needed confidence required in the finance company sector. I guess at the end of the day we may be looking for actions instead of words - the ordinary "public" may be getting a little tired of "the spin and presentation".

Are you aware of how many NZ finance companies have crossed the Tasman to present their wares and to have been quickly shown the exit door - closer relations or not.

I must confess the following I did not write but it seems very appropriate as I sit and I reflect on one or two of the recent finance company collapses and the money that may have disappeared -

"Whatever laws we pass there will always be opportunities for withholding information from the authorities or working through corrupt or naive politicians in third world countries. In poor countries, hoodwinking others out of a share of the economic pie is tempting as a route to wealth, but it is not wealth creation. Developed nations have no such excuse of poverty. Milan’s cardinal Martini told an Australian business audience recently that business ethics “requires great interior strength”. Sometimes, he said, markets are so corrupt that a person who wants to act fully ethically is ruled out of the game. When business people play the game by unacceptable rules, it’s inevitable government will respond, however clumsily."

Geoff Birss
EUFA Chairperson

On 4 January 2008 at 8:11 pm Suzanne Edmonds said:

All parties (including NZ First) had the oportunity (since the sharemarket crash) to prevent what has happened in the Financial Collapes. In particular with allowing Financial product sales people to call them selves Advisors. We will be watching out for shallow promises this year.

On live TV in 1990 - election year ( I still have the tape) both National and Labour went head to head on the issue of White collar Crime and Unscruplous financial dealings. Winston Peters was a key player on this topic also. They all made rash promises about money laundering etc etc.

AND here we are picking up the pieces again, because for 2 decades the industry has been free to run a muck.